In this case, the court analyzed the use of estimates to determine the amount of time eligible for the R&D credit as well as the type of employees includable for the credit. The primary issue was the substantiation of the amount of time the CEO spent on research and the reasonableness of his compensation.
The court analyzed whether the high percentage for a highly paid employee was well documented and supported. The court concluded that senior management time including meeting time could be included as part of the R&D process. Additionally, manager time in strategy meetings, product meetings, and idea generation meetings could be includable as R&D time.
Therefore, Suder’s time as CEO was includable because his activities were well documented, including his name on several patents. Additionally, the use of estimates was reaffirmed and the reliance on expert’s testimony was credible and reasonable.
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