Field auditors examining taxpayer claims for research and development credits are pursuing a relatively new line of questioning: “What’s your nexus?”
Common in other areas of tax, the concept of nexus is a sticking point in audits for R&D credits. Nexus refers to the connection between a qualified activity (business component) and its qualifying expense. The IRS wants to see in documentation the direct connection between the qualified wages a taxpayer claims and the qualifying business component they spent it on. Often this comes down to proving who worked on what.
Read more at Accounting Today: R&D nexus: Who worked on what?
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