The Alexander & Blake R&D Credit Method
A structured, 10-step methodology for identifying, calculating, documenting, and defending R&D tax credits. Every engagement follows the same standard — built at the business-component level for defensibility, not guesswork.A 10-step methodology for R&D credits built at the business-component level for defensibility, not guesswork.
This is not a checklist we invented for the website. It is the operating framework behind every study we deliver.
10 Steps. Every Engagement.
From initial identification through annual maintenance, each step is designed for thoroughness, CPA coordination, and examination readiness.
Identify Qualifying Business Components
We identify each product, process, software, formula, technique, invention, or improvement that may constitute a qualifying business component under IRC Section 41. This is the foundation — every claim starts here.
Interview Technical Personnel
Structured interviews with project leads, engineers, developers, and technical staff document the specific uncertainties encountered, alternatives evaluated, and experimentation performed. Sessions are designed for 30–60 minutes per project area.
Apply the Four-Part Test
Each business component is evaluated against all four statutory requirements: permitted purpose, technological in nature, elimination of uncertainty, and process of experimentation. Activities that fail any test are excluded.
Analyze Qualified Research Expenses
Wages, contractor costs, supplies, and cloud/computing expenses are allocated to qualifying activities using payroll records, invoices, project data, and time allocation analysis. Every dollar is tied to a qualifying business component.
Calculate Federal and SC Credits
We model both the Alternative Simplified Credit (ASC) and Regular Credit methods — to identify the larger credit, not just the easier one — calculate the base amount, and determine both federal and South Carolina credit amounts.
Build Project-Level Documentation
Each qualifying activity receives a detailed project narrative documenting the business component, uncertainty, experimentation, and outcome. These narratives are written to withstand technical questioning during review.
Prepare Form 6765 Support
Filing-ready schedules and computation detail map directly to Form 6765 line items. Section G business-component-level reporting — now in effect — is built into every study from the start.
Deliver Examination-Ready Study File
The complete study package includes executive summary, methodology memo, project narratives, QRE schedules, credit calculations, and an organized examination support file — structured so an examiner can navigate it without your help.
Support CPA Filing
We coordinate directly with the client's CPA or qualified tax professional on filing posture, return integration, Section 280C election support, and any questions that arise during the filing process.
Maintain Annual Documentation
For annual program clients, we conduct quarterly check-ins, intake new projects throughout the year, refresh time allocation data, and prepare the updated credit study — building a stronger claim each year.
The Alexander & Blake Study Standard
No client file is complete until every qualifying project passes this standard. These six questions form our internal quality-control checklist — every claimed activity must have documented answers before the study is delivered.
This is how we separate supportable claims from credit mills that rely on aggressive estimates and thin documentation.
What was the business component?
Product, process, software, formula, technique, invention, or improvement.
What uncertainty existed?
Capability, method, design, performance, reliability, scale, efficiency, manufacturability, or technical feasibility.
What experimentation happened?
Modeling, prototyping, testing, trial runs, formulation, design iterations, engineering analysis, software testing.
What qualified purpose existed?
Improved function, performance, reliability, quality, or efficiency.
What costs connect to the work?
Wages, supplies, contract research, cloud/computing where applicable.
What is excluded?
Funded research, routine quality control, market research, cosmetic changes, reverse engineering, management activities, post-commercial production, and non-technical work.
The IRS Four-Part Test
Each business component is evaluated separately against all four statutory requirements. An activity must satisfy all four tests to be included in the credit study.
Permitted Purpose
The activity must relate to developing or improving a product, process, software, technique, formula, or invention intended for sale, lease, license, or internal use.
Technological in Nature
The activity must fundamentally rely on principles of engineering, computer science, biological science, or physical science.
Elimination of Uncertainty
The taxpayer must face uncertainty regarding capability, method, or design at the outset of the activity.
Process of Experimentation
The taxpayer must engage in a systematic process to evaluate alternatives and resolve the uncertainty — through modeling, simulation, testing, or iterative design.
Built for the New Documentation Standard
Form 6765 Section G — business-component-level reporting — is now in effect for current-year R&D credit filings. This changes how claims must be documented and filed.
Alexander & Blake has built business-component-level documentation into every study from the start. Our method already addresses the detail the IRS now requires, including business component identification, officer involvement, and project-level QRE allocation.
Our position is simple:
We build documentation before the IRS asks for it. Your Section G reporting is built into the study by default.
Internal Review Before Delivery
Every study passes a multi-layer review before it reaches the client or CPA. This review structure exists even in a small firm — because the system should be bigger than any individual.
Preliminary Eligibility Review
Initial screening of activities against four-part test requirements and industry patterns.
Technical Qualification Review
Detailed analysis of uncertainty, experimentation, and business component classification for each claimed activity.
QRE Calculation Review
Verification of wage allocations, contractor treatment, supply costs, and base amount calculations.
Documentation Review
Quality check on project narratives, methodology memo, and supporting schedules for completeness and defensibility.
Tax Form Support Review
Reconciliation of study outputs to Form 6765 line items and SC Schedule TC-18 where applicable.
Final Sign-Off
Final review by the engagement principal confirming the study meets the Alexander & Blake Study Standard before release.
What We Screen Out
A defensible study is not just about finding qualifying work. It is about excluding what does not belong.
Discuss the Method with Us
Schedule a complimentary consultation to discuss how our methodology applies to your business activities or your clients' work. No obligation.