Allowable, funded, qualified: three questions for every expense
For med device and life sciences founders with a grant or contract award. Which expenses are allowable, which are award-funded, and which can still count toward the R&D credit.
The short version
Allowable: the expense can be charged to the award under its cost rules.
Award-funded: the award reimburses it. Not a QRE.
Company-funded: the award doesn't reimburse it. Research wages and supplies can be QREs, and 65% of contract research can count.
Fringe, overhead, general admin, and equipment: not QREs either way.
Award funding offsets QREs first: the whole award, including fringe, overhead, and fee, reduces the project's QREs before any company-funded cost counts.
Questions
Do award-funded costs count for the R&D credit?+
No. If the award reimburses it, it's not a QRE.
What can count?+
Company-funded research wages and supplies, plus 65% of company-funded contract research.
Does the award shrink the credit?+
Yes. The whole award offsets QREs first, including overhead and fee.
Fixed-price contract?+
Usually still funded. The terms decide.
Only SBIR and STTR?+
No. The same rules apply to other grants and contracts.
Less stress.
More advantage.
Ask Katie, CPA CFO →
15 free minutes. Real answers. No pitch.