A recent ruling in George v. Commissioner delivers a clear message to businesses claiming the federal R&D credit:
If it isn’t documented, it doesn’t exist.

The United States Tax Court examined whether George’s of Missouri, Inc. (GOMI) properly substantiated its research credit claims for 2012–2014. The outcome highlights where taxpayers succeed — and where they fail — in defending credits under IRS scrutiny.

What Happened?

GOMI claimed significant credits for increasing research activities.

During IRS examination, the claims were challenged due to:

• Lack of contemporaneous documentation
• Insufficient evidence of technical uncertainty
• Weak proof of a structured process of experimentation

The Court allowed credits only for projects supported by credible documentation showing that experimentation was actually performed to resolve technical challenges.

Key Takeaways from the Ruling

1️⃣ Contemporaneous Documentation Is Critical

Post-project narratives are not enough. Documentation must demonstrate:

• Identified technical uncertainty
• Systematic experimentation
• Evaluation of alternatives

2️⃣ Not All QREs Are Equal

The Court:

• Sustained qualified research expenditure (QRE) claims for supplies
• Rejected wage QREs where documentation was insufficient

Projects with contradictory evidence — showing uncertainty was resolved before work began — were disallowed.

3️⃣ Reasonable Cause Can Protect Against Penalties

Importantly, the Court ruled that GOMI had reasonable cause to rely on its service provider’s advice, leading to abatement of accuracy-related penalties.

This reinforces that professional advisory support matters — but it does not replace documentation.

What This Means for Businesses

The R&D credit remains powerful — but defensibility now requires:

• Real-time project tracking
• Technical narratives supported by data
• Financial alignment between engineering and tax teams
• Clear linkage between experimentation and claimed expenses

The IRS continues to scrutinize R&D credits closely, especially large or multi-year claims.

Strategic Perspective

This ruling isn’t restrictive — it’s clarifying.

The Court has outlined what qualifies, what fails, and where advisory reliance fits in the compliance equation.

Accelus Global works alongside engineering, finance, and tax leadership teams to design defensible R&D credit frameworks — from qualification analysis to audit-ready documentation and expense quantification.In today’s environment, documentation isn’t administrative.
It’s strategic protection.