Idaho State Tax Commission, Docket No. 0-832-082-944

Petitioner, an Idaho S corporation providing forestry mulching and land-clearing services, claimed an Idaho research credit for developing what the record calls a 'Handcrew Technique' — an approach integrating manual hand-crew labor with mechanized mulching equipment to more efficiently clear vegetation on varied and difficult terrain.

Genuine Uncertainty, but No Documented Experimentation

The Tax Commission acknowledged that Petitioner faced real uncertainty at the outset regarding how to safely and effectively combine hand-crew work with heavy equipment across different terrain and vegetation conditions. However, the Commission found that Petitioner kept no contemporaneous 'job order' records or other documentation showing that specific techniques were tried, evaluated, and refined through a systematic process of experimentation, as opposed to being developed through ordinary on-the-job trial and adjustment by experienced crews.

Petitioner's representatives were only able to describe the development process in general, after-the-fact terms, without records tying particular jobs to specific hypotheses being tested. The Commission held this was insufficient to substantiate that the qualifying activity constituted a process of experimentation under IRC section 41(d)(1)(C).

The Notice of Deficiency Determination was affirmed, and the Commission determined Petitioner owed $6,117 in additional tax.

Significance: The decision is notable for explicitly crediting that a taxpayer faced real technical uncertainty, yet still denying the credit entirely — underscoring that the Tax Commission treats contemporaneous documentation of the experimentation process, not just the existence of uncertainty, as a independent and non-negotiable requirement.