Your bosses at ABC CPAs email you a question. One client, XYZ Company, recently computed the research and development tax credit of $400,000. This will result in a tax credit on their Form 1120 of $60,000 (15%).

On the other hand, they are uncertain that all $400,000 will be considered eligible costs. They think that $80,000 of those costs will most likely be denied by the IRS sometime in the future.

Write an email back to your bosses.