Supreme Court Denies Certiorari in Union Carbide

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March 18, 2013

The Court this morning denied Union Carbide’s petition for certiorari that sought review of the Second Circuit’s denial of claimed research and experimentation credits for the costs of certain supplies used in production process experiments.  The petition had also asked the Court to consider the court of appeals’ application of Auer deference priniciples.  See our prior reports here.

The Court also entered an order denying a motion by the National Association for Manufacturers to file an untimely brief as amicus curiae in support of the petition.  Although the Court routinely grants motions for leave to file timely amicus briefs, … Read More

Briefing Completed on Union Carbide Cert Petition

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February 20, 2013

To close the loop on yesterday’s post on the Union Carbide certiorari petition, the taxpayer has now filed its reply brief in support of the petition.  The reply brief focuses primarily on the Auer deference issue, distinguishing the cases cited by the government in its defense of the application of Auer deference.  The reply brief also vigorously disputes the government’s contention that the Second Circuit would have reached the same result if it had not deferred to the government’s interpretation of the regulation.

Union Carbide – Taxpayer’s Certiorari Stage Reply BriefRead More

Government Opposes Supreme Court Review in Union Carbide

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February 19, 2013

The government has filed a brief in opposition to Union Carbide’s request for review of the Second Circuit’s decision denying its research credit claim.  See our prior reports on the cert petition and the court of appeals’ decision here and here.  With respect to the basic legal issue, the government’s concise analysis tracks that of the Second Circuit, arguing that the taxpayer would get a “windfall” if it received “a credit for the cost of supplies that the taxpayer would have incurred regardless of any qualified research.”  The government emphasizes that there is no circuit conflict on this issue … Read More

Supreme Court Review Sought in Union Carbide

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December 27, 2012

Union Carbide has filed a petition for certiorari, docketed as No. 12-684, asking the Supreme Court to review the Second Circuit’s rejection of its research credit claim.  See our prior reports describing the issue and reporting on the decision.

The petition articulates two questions presented:  1) the basic substantive tax question whether, in the context of a production process experiment, the research credit is limited to the costs of supplies that would not have been incurred but for the experiment; and 2) whether the court erred in deferring to the IRS’s proffered interpretation of its own research credit regulations.  … Read More

Second Circuit Upholds Denial of R&E Credit Claims in Union Carbide

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September 7, 2012

The Second Circuit today affirmed the Tax Court’s decision in Union Carbide denying the research and experimentation credit for the costs of certain supplies used in production process experiments that sought to improve a process that was already in use for producing products. The court concluded that the credit is available only for the costs of supplies that would not have been incurred but for the experiment; hence, it disallowed the credit claim for the costs of other supplies that concededly were necessary for the experiment because they are otherwise necessary for the production process, but would have been incurred … Read More

Second Circuit Considering Important Research Credit Issue in Union Carbide

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April 2, 2012

We present here a guest post by our colleague Patricia Sweeney:

On March 29, 2012, the Second Circuit heard oral arguments in Union Carbide Corp. & Subsidiaries v. Commissioner, No. 11-2552 (Judges Straub, Pooler & (visiting district court Judge) Korman on the panel ).  The case involves Union Carbide Corp’s (“UCC’s”) claim for research and experimentation credits with respect to 106 research projects.  In order to resolve the issues expeditiously, the parties agreed that the Tax Court would limit trial to the five largest projects.  All five projects involved process experimentation after products were placed in commercial operation.  For … Read More