TD 9104 – Background
On December 2, 1998, the Treasury Department and the IRS published in the Federal Register (63 FR 66503) a notice of proposed rulemaking (REG–105[1]70–97, 1998–2 C.B. 729) under section 41 (1998 proposed regulations) relating to the credit for increasing research activities (research credit). The 1998 proposed regulations addressed, in relevant part, (1) the definition of qualified research under section 41(d), (2) the application of the exclusions from the definition of qualified research, and (3) the application of the shrinkingback rule. Comments responding to the 1998 proposed regulations were received and a public hearing was held on April 29, 1999.
On January 3, 2001, the Treasury Department and the IRS published in the Federal Register (66 FR 280) final regulations relating, in relevant part, to the definition of qualified research under section 41(d) (TD 8930). In response to taxpayer concerns regarding TD 8930, on January 31, 2001, the Treasury Department and the IRS published Notice 2001–19 (2001–10 I.R.B. 784), announcing that the Treasury Department and the IRS would review TD 8930 and reconsider comments previously submitted in connection with the finalization of TD 8930. Notice 2001–19 also provided that, upon the completion of the review, the Treasury Department and the IRS would announce changes to the regulations, if any, in the form of proposed regulations.
On December 26, 2001, the Treasury Department and the IRS published in the Federal Register (66 FR 66362) a notice of proposed rulemaking (REG–112991–01) reflecting the Treasury Department and the IRS’ review of TD 8930 (2001 proposed regulations). Comments responding to the 2001 proposed regulations were received and a public hearing was held on March 27, 2002. After considering the comments received and the statements made at the public hearing, portions of the 2001 proposed regulations are adopted as revised by this Treasury Decision.
