A common question is the difference between troubleshooting and qualified research for the R&D tax credit. The short answer is that routine troubleshooting that applies known fixes to known problems is generally not qualified research. Troubleshooting that involves an uncertain technical problem and a process of experimentation to evaluate alternatives may warrant review. 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.
Routine Troubleshooting
Routine troubleshooting — diagnosing a known problem with a known cause and applying a known fix — is generally not qualified research. The characteristics of routine troubleshooting include:
- Known problem — the problem is familiar and has been seen before.
- Known cause — the cause of the problem is established.
- Known fix — the solution is established and is applied routinely.
Where all three are present, the work is applying established knowledge, not conducting research. The elimination of uncertainty and process of experimentation elements are generally not satisfied, because there is no technical uncertainty and no evaluative process of alternatives.
Troubleshooting That May Warrant Review
Troubleshooting may warrant review when it involves an uncertain technical problem and a process of experimentation:
- Uncertain problem — the problem is new or unfamiliar, and the cause is not established.
- Uncertain cause — the root cause is uncertain, and alternative hypotheses need to be evaluated.
- Uncertain solution — the fix is not established, and alternative corrective approaches need to be tested.
Where the troubleshooting involves evaluating alternative root-cause hypotheses and testing corrective approaches through a structured process, the work may warrant review as qualified research. For more on this, see our page on failure analysis.
The Distinction Is in the Uncertainty
The distinction between routine troubleshooting and qualified research is in the uncertainty:
- Routine troubleshooting — known problem, known cause, known fix. No technical uncertainty. Not qualified research.
- Troubleshooting as research — uncertain problem, uncertain cause, uncertain solution. Technical uncertainty present, and a process of experimentation to evaluate alternatives. May warrant review.
The same physical activity — diagnosing a problem and fixing it — can be routine troubleshooting or research depending on whether there is a genuine technical uncertainty and a process of experimentation.
Hypothetical Example
Consider a manufacturer that experiences a known problem with a known cause and applies a known fix. This is routine troubleshooting, not research.
By contrast, if the manufacturer experiences a new, unfamiliar problem, is uncertain of the cause, evaluates alternative root-cause hypotheses, and tests corrective approaches through a structured process, the work may warrant review as qualified research.
These examples are illustrative only and do not state whether any particular activity qualifies.
Documentation That May Help
Records that can help support the troubleshooting vs. research analysis include records showing whether the problem, cause, and fix were known or uncertain, records of alternative hypotheses evaluated, and records of the process of experimentation. For more, see our page on R&D tax credit documentation.
Key Takeaway
Routine troubleshooting that applies known fixes to known problems is generally not qualified research. Troubleshooting that involves an uncertain technical problem and a process of experimentation to evaluate alternatives may warrant review. Because the distinction is fact-specific, professional review is appropriate.