Idaho State Tax Commission, Docket No. 1-707-713-536

Petitioner, an Idaho S corporation engaged in real estate development, floorplan design, and structural engineering, claimed an Idaho research credit across two categories of activity: a 'Product' component covering floorplan design and engineering work, and a 'Software' component covering website development and 3D modeling used to market properties.

Floorplan Engineering Satisfied the Discovery Test, but Not Substantially-All

The Tax Commission found that Petitioner's floorplan and structural engineering work did satisfy the discovering-technological-information test, given the genuine engineering uncertainties involved in adapting designs to varied lot conditions and structural requirements. However, the Commission could not verify that qualifying activity constituted substantially all of the work on any of three claimed projects, because Petitioner's supporting wage calculations relied on flat 33% allocations of employee time across projects, unsupported by any interview notes, timesheets, or other contemporaneous documentation explaining how that percentage was derived.

Website and 3D Modeling Failed Outright

The website development and 3D modeling activities were denied in full. The Commission found these relied on commercially available software and standard techniques, with no documentation of any hypothesis-testing or evaluation of technical alternatives that would satisfy the process-of-experimentation requirement.

Because the Product component's QREs could not be substantiated despite qualifying in principle, and the Software component did not qualify at all, the Commission affirmed denial of the credit in full, finding $23,401 in additional tax due for the 2021 tax year as an affected business entity.

Significance: The decision shows that satisfying the discovery-of-technological-information prong is not enough on its own — even genuine, qualifying engineering uncertainty will not save a claim where the wage expenses attributed to that work rest on unsupported flat-percentage estimates rather than documented time allocation, consistent with the estimation standard applied in Little Sandy Coal Co. v. Commissioner.