It’s nothing to cackle at. A recent court decision involving the poultry industry has provided much needed clarity for the agribusiness sector and offers a critical lesson for companies in every industry.
The case of George v. Commissioner, T.C. Memo 2026-10, involved a poultry producer claiming research and development credits for experimental feed and vaccine trials.
The ruling serves as a significant win for the agriculture industry beyond just poultry. The court confirmed that farming activities can constitute qualified research. More importantly, the court validated the concept of the pilot model in an agricultural setting. This means that the animals themselves -- along with the feed used during the experiment -- can be claimed as qualified supply costs.
For farmers and ranchers, this interpretation cracks open the door to tax savings that are often overlooked. Frost Law can help navigate these issues.
While the ruling is a victory for eligibility, it also delivers a harsh warning regarding documentation. Despite the favorable interpretation of the law, the taxpayer lost a significant portion of their claim due to inconsistent records.
The issue arose from a discrepancy between the R&D report and the actual daily operations. The tax consultant had prepared a report stating that the farm was testing a specific high dosage antibiotic regimen. However, when the court examined the daily feed logs and barn records, the data told a different story. The contemporaneous logs showed that the chickens received standard dosages rather than the experimental amounts described in the study.
The court ruled that the daily business records held more weight than the retrospective R&D report. Because the raw data contradicted the narrative in the study, the claim was disallowed. This outcome highlights a reality that every business must understand. You cannot rely solely on a study prepared months or years after the work is finished. The most powerful evidence in an audit is the raw data generated during the project.
There was, however, one golden egg for the taxpayer regarding penalties. The IRS attempted to impose a strict 20% accuracy-related penalty on the disallowed portion of the credit, which is standard practice when a claim is found to be invalid. The court rejected this penalty. The judge ruled that because the taxpayer had hired a professional tax firm to prepare the study they had acted with reasonable cause and in good faith. This reliance on professional advice saved the company from a massive additional fine even though it did not save the credit itself.
If your company is conducting experiments, it is vital to ensure your production data matches your R&D narrative. Do not wait for an audit to discover that your own logs undermine your claim. While hiring an expert might protect you from penalties, only accurate contemporaneous records will protect your cash.
This is one of many valuable lessons involving the complex rules behind the R&D credit. Understanding the guidelines can mean a lot of money for your business and your bottom line. Frost Law can help you navigate the R&D credit. We know exactly what to look for when it comes to R&D tax credits.
Click here to schedule a Review or call us at (410) 497-5947. Let’s find out how much cash you might be leaving on the table. After all, it could be a lot more than just chicken feed.
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It’s nothing to cackle at. A recent court decision involving the poultry industry has provided much needed clarity for the agribusiness sector and offers a critical lesson for companies in every industry.
The case of George v. Commissioner, T.C. Memo 2026-10, involved a poultry producer claiming research and development credits for experimental feed and vaccine trials.
The ruling serves as a significant win for the agriculture industry beyond just poultry. The court confirmed that farming activities can constitute qualified research. More importantly, the court validated the concept of the pilot model in an agricultural setting. This means that the animals themselves -- along with the feed used during the experiment -- can be claimed as qualified supply costs.
For farmers and ranchers, this interpretation cracks open the door to tax savings that are often overlooked. Frost Law can help navigate these issues.
While the ruling is a victory for eligibility, it also delivers a harsh warning regarding documentation. Despite the favorable interpretation of the law, the taxpayer lost a significant portion of their claim due to inconsistent records.
The issue arose from a discrepancy between the R&D report and the actual daily operations. The tax consultant had prepared a report stating that the farm was testing a specific high dosage antibiotic regimen. However, when the court examined the daily feed logs and barn records, the data told a different story. The contemporaneous logs showed that the chickens received standard dosages rather than the experimental amounts described in the study.
The court ruled that the daily business records held more weight than the retrospective R&D report. Because the raw data contradicted the narrative in the study, the claim was disallowed. This outcome highlights a reality that every business must understand. You cannot rely solely on a study prepared months or years after the work is finished. The most powerful evidence in an audit is the raw data generated during the project.
There was, however, one golden egg for the taxpayer regarding penalties. The IRS attempted to impose a strict 20% accuracy-related penalty on the disallowed portion of the credit, which is standard practice when a claim is found to be invalid. The court rejected this penalty. The judge ruled that because the taxpayer had hired a professional tax firm to prepare the study they had acted with reasonable cause and in good faith. This reliance on professional advice saved the company from a massive additional fine even though it did not save the credit itself.
If your company is conducting experiments, it is vital to ensure your production data matches your R&D narrative. Do not wait for an audit to discover that your own logs undermine your claim. While hiring an expert might protect you from penalties, only accurate contemporaneous records will protect your cash.
This is one of many valuable lessons involving the complex rules behind the R&D credit. Understanding the guidelines can mean a lot of money for your business and your bottom line. Frost Law can help you navigate the R&D credit. We know exactly what to look for when it comes to R&D tax credits.
Click here to schedule a Review or call us at (410) 497-5947. Let’s find out how much cash you might be leaving on the table. After all, it could be a lot more than just chicken feed.
