A common question from panel manufacturers is whether panel product development can qualify as research and development for the federal R&D tax credit under Section 41. The short answer is that panel product development may constitute qualified research when the work evaluates alternatives to resolve a technical uncertainty about product performance. Routine panel production generally is not qualified research. This page explains the framework in general terms. It is educational and is not individualized advice. For the foundational framework, see our page on qualified research.
When Panel Development May Warrant Review
Panel product development may warrant review when the work involves a genuine technical uncertainty and a process of experimentation. Under the four-part test, the work must be for a permitted purpose, be technological in nature, be intended to eliminate uncertainty, and be conducted through a process of experimentation.
Common scenarios that may warrant review include:
- New panel product — evaluating alternative designs to resolve uncertainty about whether a new panel can achieve the required structural performance.
- New core — testing alternative core materials to resolve uncertainty about whether a new core can achieve the required properties.
- New facing — evaluating alternative facing approaches to resolve uncertainty about whether a new facing can achieve the required performance.
- New application — testing alternative approaches to resolve uncertainty about whether a panel can perform in a new application.
Routine Production vs. Product Development
A central distinction is between routine panel production and product development:
- Routine production — manufacturing known panel products using established methods. There is no technical uncertainty. This is production, not research.
- Product development — developing new panel products where there is a technical uncertainty about whether the product can achieve the required performance. This may warrant review.
Hypothetical Example
Consider a manufacturer that is developing a new structural panel for a new application and is uncertain whether any available core and facing combination can achieve the required strength-to-weight ratio. The company evaluates alternative approaches, tests each, and systematically varies the approach to resolve the uncertainty. This may warrant review as qualified research.
By contrast, if the same manufacturer produces a standard panel using an established process, that is routine production, not research.
This example is illustrative only and does not state that the activity definitely qualifies.
Documentation That May Help
Records that can help support panel development claims include product development records identifying the uncertainty and alternative approaches, structural test results, and records of how results informed product decisions. For more, see our page on R&D tax credit documentation.
Key Takeaway
Panel product development may constitute qualified research when the work evaluates alternatives to resolve a technical uncertainty about product performance. Routine panel production generally is not qualified research. Because the distinction is fact-specific, professional review is appropriate before claiming the credit.