Aerospace Industry ATG
The IRS published this ATG on 1/28/05.
TABLE OF CONTENTS:
I. Introduction
A. Focus of Aerospace ATG
B. Applicability of Aerospace ATG
C. Industry Overview/Description
II. Contracting
A. General
1. Government Contracting
2. Commercial Contracting
B. Contract Types
1. Fixed-Price Family of Contracts
2. Cost-Plus Family of Contracts
3. Other
C. Standard Sections of a Contract
III. Contracting Activities
A. Contracting Stages
1. Request for Proposal
2. Bid & Proposal
3. Awards / Authorization
B. Development Activities
1. Design Phase
2. Development Testing
3. Certification
4. Preparation for Production
5. Deliverable Production Units per CLIN
IV. Rules of Law
A. Research & Experimental Expenditures IRC § 174 Overview
B. Qualified Research Expense & Activities Flowchart (IRC § 41(b) & (d))
C. Computation Flowchart (IRC § 41(c) & (f))
V. Issues Peculiar to the Aerospace Industry
A. Funded Research
1. Two-Part Test
2. Funded Research Considerations
B. Cascading Credit
1. Prime Contractor Level
2. Subcontractor Level
C. Other Issue Analysis
1. After Commercial Production
2. Adaptation / Duplication (e.g. Reverse Engineering)
3. Business Component
4. IRC § 174 Consideration
5. Multiple Prototypes
6. Mock-ups and Models
7. Special Tooling & Special Test Equipment
8. Tooling-up
9. Testing
D. IRC § 41(d) – Qualified Research
1. Bid & Proposal Cost
2. Program Management
3. Safety
4. Training
5. Technical Writing
6. Research Outside the United States
7. FAA Certification Costs
E. IRC § 41(b) Expense Items
1. Wages-Direct Supervision
2. Wages-Direct Support
3. Wages- Employee Benefits
4. Wages-G&A, Marketing & Sales, Information Technology
5. Supplies-Overhead
6. Supplies-Tooling
7. Supplies-Extraordinary Utilities
8. Contract Services – Independent Contractors
9. Self-Constructed Supplies
VI. Computational Aspects
A. Computational Regimes
B. Base Year Records
C. Base Amount Issues
1. Gross Receipts
2. Consistency Rule
3. Aggregation
4. Acquisitions / Dispositions
D. Claims
1. Notice 2002-44 – Research Credit Claim vs. Original Return Filing
2. IRC §280C Election
3. Amended Refund Claims (Pre-Statute of Limitations Expiration)
4. Amended Refund Claims (Post-Statute of Limitations Expiration)
5. General Claims/Waiver
6. Lockheed Martin Decision
VII. Examination Tools & Records
A. Anatomy of Proposal (B&P) Effort
B. Flow Chart of Audit Tasks
C. Documents
Download a .pdf of the complete ATG here: Aerospace ATG
Link to the IRS website version here: Aerospace ATG
