Union Carbide Corp. v. Commissioner of Internal Revenue, No. 11-2552 (2d Cir. 2012)Annotate this Case
This case stemmed from three research projects at two production plants in Hahnville, Louisiana that UCC conducted during the 1994 and 1995 tax-credit years. The research was conducted on products that were in the process of being manufactured for sale and were in fact sold. Nevertheless, UCC requested a research credit not just for the additional costs of supplies associated with the research. Instead, it requested a research credit for the costs of all the supplies used in the production of the product even though those supplies would have been used regardless of any research performed. The Tax Court held that UCC was not entitled to research credits for the entire amount spent for the supplies at issue. Instead, as the Commissioner argued, it was entitled to credit for only those additional supplies that were used to perform the research. The court affirmed the judgment and denied UCC a credit for supplies used in the conduct of qualified research under 26 U.S.C. 41.