Continuing uncertainty on research credit definition of "gross receipts"

The definition of "gross receipts" for Sec. 41 research credit purposes in the affiliated group context remains uncertain. This definition is important in calculating a taxpayer's "base amount," to which current-year qualified research expenditures are compared in computing the research credit. Chief Counsel Advice (CCA) 200233011 concluded that a taxpayer and its majority owned foreign subsidiaries would be treated as a single taxpayer for Secs. 41(f) and 1563(a) purposes. The IRS Office of Examinations has been raising the computation of gross receipts as an issue and, in many cases, has taken a position contrary to CCA 200233011's conclusion. CC2003-014 clarified generally the effect of proposed publications and IRS ruling positions.