The Docket
The research credit and cost segregation rest on decades of litigation. Case briefs of the decisions practitioners actually cite — what was argued, what the court held, and what it means for claims today.
Guide · Working · 8 min
How cost segregation became law: the cases behind the studies
Cost segregation rests on five decades of case law — from investment tax credit component disputes through Whiteco's permanency factors to Hospital Corp of America and the modern boundary cases. Here is the doctrinal lineage every study relies on.
Guide · Pro · 10 min
The research credit case law map: every doctrine, every leading case
A doctrine-by-doctrine map of Section 41 litigation — qualified research, funded research, base periods, substantiation, and process of experimentation — with the leading cases, the circuits that decided them, and how IRS exam positions trace back to each.
Brief · Working · 3 min
Leon Max v. Commissioner: fashion design and the style-and-taste exclusion
Leon Max, T.C. Memo 2021-37, denied research credits for a fashion designer's garment development process — the work was not technological in nature, and the uncertainties resolved were matters of style, taste, and cosmetics excluded by Section 41(d)(3)(B).
Brief · Working · 3 min
Eustace v. Commissioner: routine software development is not experimentation
The Seventh Circuit's 2002 affirmance in Eustace denied research credits for an insurance-software company's development work — ordinary coding, debugging, and feature additions are not a process of experimentation, and without evidence separating experimental work, no wages qualify.
Brief · Intro · 3 min
Cohan v. Commissioner: what the estimation doctrine does and does not save
Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930), lets courts estimate deductions when records are imperfect but spending clearly occurred — bearing heavily against the taxpayer whose inexactitude is of their own making. It will not rescue an undocumented cost segregation or research credit claim.
Brief · Working · 3 min
Norwest v. Commissioner: internal-use software and the consistency rule
Norwest Corp. v. Commissioner, 110 T.C. 454 (1998), set the early standards for internal-use software research claims and enforced the Section 41(c) consistency rule — base-period QREs must be determined the same way as credit-year QREs.
Brief · Pro · 3 min
Dynetics v. United States: funding is decided contract by contract
The Court of Federal Claims' 2015 Dynetics decision refused to generalize the funded-research analysis across a contract portfolio, reading inspection, acceptance, and rework clauses agreement by agreement to locate the real economic risk of research failure.
Brief · Pro · 3 min
Scott Paper v. Commissioner: primary use, function, and dual-purpose utilities
Scott Paper Co. v. Commissioner, 74 T.C. 137 (1980), established the primary-use and functionality analysis for special-purpose structures and utility systems — the doctrinal basis for allocating electrical and steam capacity between equipment and building service in modern cost segregation studies.
Brief · Pro · 3 min
Populous Holdings v. Commissioner: fixed-fee design contracts are not funded
In a 2019 summary judgment order, the Tax Court held that an architecture firm's fixed-fee design contracts were not funded research — the firm bore the risk of redesign at its own cost and retained substantial, non-exclusive rights in its design knowledge.
Brief · Working · 3 min
Boddie-Noell v. United States: restaurant assets as accessories to the business
Boddie-Noell Enterprises, Inc. v. United States, 36 Fed. Cl. 722 (1996), sorted dozens of Hardee's restaurant components under the investment tax credit, asking which items were accessories to the food-service business rather than structural parts of the building — still the touchstone for restaurant and retail studies.
Brief · Working · 3 min
Geosyntec Consultants v. United States: fixed-price wins, capped cost-plus loses
The Eleventh Circuit's 2015 Geosyntec decision drew the funded-research line by contract type — fixed-price contracts leave the risk of research failure with the researcher, while capped cost-plus contracts reimburse effort regardless of outcome and are funded.
Brief · Pro · 3 min
Peco Foods v. Commissioner: purchase-agreement allocations bind the buyer
Peco Foods, Inc. v. Commissioner, T.C. Memo 2012-18, aff'd by the Eighth Circuit, held that asset allocations written into a Section 1060 purchase agreement bind the taxpayer under the Danielson rule — a later cost segregation study cannot subdivide categories the contract already fixed.
Brief · Working · 3 min
Fairchild Industries v. United States: funded research turns on who bears the risk
The Federal Circuit's 1995 Fairchild decision established the controlling test for the funded research exclusion — research is not funded when payment is contingent on success, because the researcher bears the financial risk of failure.
Brief · Working · 3 min
AmeriSouth XXXII v. Commissioner: the government's cost segregation counterattack
AmeriSouth XXXII, Ltd. v. Commissioner, T.C. Memo 2012-67, reclassified nearly all of an apartment complex's cost-segregated components back to 27.5-year structural property — and showed what happens when a taxpayer abandons its own case mid-litigation.
Brief · Working · 3 min
Siemer Milling v. Commissioner: the documentation cautionary tale
Siemer Milling, T.C. Memo 2019-37, denied research credits for a flour miller's product and process projects because the record showed no process of experimentation and no reliance on hard science — the standard citation for what happens when documentation is missing.
Brief · Working · 3 min
Hospital Corp of America v. Commissioner: the case that legitimized cost segregation
Hospital Corp of America v. Commissioner, 109 T.C. 21 (1997), held that ITC-era component classification survives into MACRS — hospital branch wiring and kitchen plumbing were Section 1245 property with short recovery periods. The IRS acquiesced, and the modern cost segregation industry followed.
Brief · Working · 3 min
Little Sandy Coal v. Commissioner: the substantially-all ratio has teeth
The Seventh Circuit's 2023 Little Sandy Coal decision denied research credits for first-of-a-kind vessels because the shipbuilder never proved that substantially all project activities constituted a process of experimentation — novelty alone does not satisfy Section 41(d).
Brief · Working · 3 min
Whiteco Industries v. Commissioner: the six-factor permanency test
Whiteco Industries v. Commissioner, 65 T.C. 664 (1975), gave tax law its standard test for whether an asset is an inherently permanent structure or tangible personal property — six practical questions about movability that still govern cost segregation classifications.
Brief · Working · 3 min
Suder v. Commissioner: incremental development qualifies, excessive founder wages do not
In Suder, T.C. Memo 2014-201, the Tax Court held that eleven of twelve phone-system development projects were qualified research, but slashed the CEO's claimed wages as unreasonable compensation — the leading case on both routine-innovation claims and owner-wage QREs.
Brief · Working · 3 min
Union Carbide v. Commissioner: plant-scale trials and the limits of supply QREs
The Tax Court's 2009 Union Carbide decision held that experiments run on production-scale equipment can be qualified research, but disallowed most claimed supply costs because materials consumed in ordinary production are not research expenses.