Form 6765 Section G: How the Big Beautiful Bill Raises the Stakes for R&D Documentation

With the passage of the “Big Beautiful Bill,” taxpayers are re-evaluating how they treat Section 174 expenses and R&D tax credit claims. One of the most critical takeaways? Proper documentation is more important than ever.

Key Changes to Section 174 and Form 6765

Full Section 174 expensing has been restored, and aligns with additional IRS requirements for a new section on the Federal Form 6765 (Section G) that requires additional reporting and documentation for applicable R&D credit claims. Additional IRS scrutiny is expected post-reform, as more taxpayers will be amending returns and navigating the compliance options for treating Section 174 expenses, making the accurate completion of Section G even more critical.

Breaking Down Section G

Section G is required for any taxpayer that: 

• Claims over $1.5M of Qualified Research Expenditures (QREs) or,
• Has over $50M in annual revenue in 2025

Section G appears on the current Form 6765 but is optional for all taxpayers in 2024. To complete Section G, taxpayers must report the number of business components related to R&D expenses, along with an identifier or name, type, and information sought to be discovered. 

Wage expenses must be broken out by project and by direct research, supervision, and support. Supplies, computer leasing, and contract research must also be reported by project. Prior to 2025, expenses were not required to be reported by project. However, due to IRS scrutiny and deficiencies in prior filings, Section G was added to the Federal Form 6765.

Next Steps for CPA Firms and Taxpayers Navigating R&D Compliance

With an expected increase in R&D claims and higher R&D spending projected due to the “Big Beautiful Bill” tax changes, accurate completion of Federal Form 6765, including Section G, should be a top priority for taxpayers. There is also increased audit exposure when amending returns for prior years’ credits and Section 174 expense adjustments, so contemporaneous documentation to demonstrate compliance is crucial.

As CPAs engage in more discussions with clients post-reform, it is essential to ensure proper R&D documentation and reporting, regardless of whether the client falls under Section G reporting requirements or not.

If you have any questions about how McGuire Sponsel can help substantiate R&D claims and complete Section G of the Federal 6765, please reach out to McGuire Sponsel’s R&D Tax Credit Services team. 

You can also dive deeper into the “Big Beautiful Bill” by exploring our “Big Beautiful Bill” resource hub for more insights.