IRS Revises Form 6765 Instructions for OBBBA

On Feb. 6, 2026, the IRS released revised instructions for Form 6765. The updates reflect recent legislative changes and clarifications affecting the computation and reporting of the research credit under Section 41.

Taxpayers claiming the research credit for tax year 2025 and forward should carefully review these revisions, as several changes impact reporting requirements, definitions, and elections.

The revised instructions do not provide new substantive rules for Section 174A or detailed direction on how to complete the new Section G business component reporting. Comments on Section G and the instructions are open until March 31.

Key updates and clarifications

• Expanded guidance on domestic R&E expenditures (Section 174A)
  The revised instructions include guidance regarding domestic R&E expenditures under Section 174A. The updates:
  • Provide a dedicated explanation of the treatment of Section 174A expenditures, including deduction or capitalization considerations
  • Clarify how Section 174A amounts interact with the Section 280C reduced credit election
  • Specify that if a taxpayer does not elect the reduced credit under Section 280C, adjustments to Section 174A expenditures must reflect the full gross credit amount

Crowe observation

This expanded discussion reflects increased IRS focus on coordination between Section 174A capitalization rules and the Section 41 research credit.

• Revised definition of qualified research expenses (QREs)
  The instructions update the definition of QREs to more closely align with statutory language under Section 41(d) and the treatment of expenditures under Section 174A. While the core components of QREs (wages, supplies, computer rentals, and contract research) remain unchanged, the revised language updates the definition and reinforces the connection between Section 174A treatment and credit eligibility.
• Section G: Business component information reporting
  Section G, which requires detailed reporting of business components generating the credit, has been further refined as follows:
  • Updates statutory references, including the qualified small business definition under Section 41(h)(3)
  • Clarifies the application of the $50 million gross receipts threshold based on prior tax years
  • Changes language regarding the “principal business activity code references” to the “top-level return” rather than Form 1120, “U.S. Corporation Income Tax Return”
  • Adds additional regulatory citations for wage and contract research expense reporting

Crowe observation

Although Section G remains optional for certain taxpayers for tax years beginning before 2026, the revised instructions provide clearer applicability rules and indicate continued movement toward expanded disclosure requirements.

• Valid claim guidance reference removed
  The IRS removed references to the list of information required by Office of Chief Counsel memorandum 20214101F in the refund claim discussion. This memorandum supported the IRS’ policy requiring the submission of significant and detailed information with a refund claim for the IRS to consider the claim valid. Instead, the draft instructions direct taxpayers to follow applicable procedures for valid research credit refund claims. It is unclear whether removal of the list indicates a change in IRS policy.
• Additional regulatory references
  The “Special Rules” section now includes reference to Treasury Regulation Section 1.41-6, in addition to Section 1.41-7, potentially signaling an IRS focus on aggregation, allocation, and controlled-group considerations.

Practical considerations

Taxpayers should consider the following actions:

• Review Section 174A treatment and confirm proper coordination with the Section 280C election.
• Continue preparing for Section G by putting processes in place to identify business components and maintaining the supporting documentation needed for the required disclosures for tax years beginning after 2025.
• Align documentation processes to substantiate both original and amended research credit claims.
• Assess potential implications for controlled groups and short tax years.
• Prepare and submit required attachments using appropriate e-file naming conventions and including relevant supporting schedules for Section 280C and controlled-group reporting.

Looking ahead

The revisions generally reinforce existing direction and largely restate the OBBBA treatment of domestic R&E and confirm the IRS’ direction for additional reporting. Taxpayers still need more practical guidance on Section 174A application and on how to complete Section G in a consistent, audit-ready way.

The expectations for research credit claims continue to evolve. Early planning and documentation review are critical to minimizing risk and complying with the requirements. Taxpayers should consult their tax advisers to evaluate the impact of the changes to the Form 6765 instructions.