Procter & Gamble Wins Summary Judgment in Important Research Credit Case

U.S. District Court rules in company's favor and determines all members of a controlled group of corporations should be treated as a single taxpayer when calculating research credits.

On June 25, 2010, the U.S. District Court for Southern District of Ohio in Procter & Gamble Co. and Subsidiaries v. United States, No. 1:08-cv-00608-TSB, granted partial summary judgment in favor of Procter & Gamble (P&G) and denied the government's cross motion in an important tax case involving the computation of the research tax credit under Section 41 of the Internal Revenue Code. The court framed the issue for decision as "whether a taxpayer must include the results of intercompany transactions within its 'Gross Receipts' for purposes of determining the amount of its research credit."