Following a federal determination for research credit cases.

• Position: FTB NEWS

It's not always clear how to apply the FTB's federal determination for research credit cases, especially if there was no review of the research credit at the federal level. The following illustrates situations where the FTB would not automatically follow federal actions for research credit cases or would need to inquire further into the credit computation:

* Example 1: The taxpayer reported a federal research credit on their California return. The 1RS audited the federal return, but did not inquire about the federal research credit. Following federal is not appropriate in this scenario. There was no on-point examination of the issue.

* Example 2: The 1RS opened an examination and issued a standard information request for the research credit.

No follow-up requests were sent, and no analysis or working papers were found in the 1RS audit to indicate there was an examination of the research credit. The 1RS did not make any adjustment to the research credit. In this instance, there was no on-point examination of the federal examination of the research credit. Following federal would not be appropriate in this scenario.

* Example 3: The 1RS opened an examination and issued the standard IDR for the research credit. The 1RS audit file indicates that it...