Process of experimentation
In accounting, process of experimentation means evaluating one or more alternatives to achieve a result whose capability, method or appropriate design is uncertain at the start, by modeling, simulation or systematic trial and error grounded in the physical or biological sciences, engineering or computer science.
Authority: Treas. Reg. §1.41-4(a)(5) (opens in a new tab). Sources
The lessons that teach this
From the free founder back-office course, taught on one company's books, with exercises to work it yourself.
- R&D creditThe four-part test: what counts as qualified researchFour tests, applied to each business component separately, worked on one hypothetical piece of software.10 min
- R&D creditRecords, amended claims and state creditsThe records a credit stands on, what an amended-return claim must contain, which elections it can't make, and where state credits come in.9 min
For founders
The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.
What it is not called
Each of these means something else. Use one here and an accountant reading the product notices.
- testing (routine quality control testing is excluded)
Also in Research credit
Defined in Lexicon. This page is generated from that document, so the two can't disagree.