Overview

Your AI/ML clients are leaving R&D credits on the table - and the ones who are claiming them aren't documenting at the level the IRS now expects.The One Big Beautiful Bill Act rewrote §174 expensing rules in July 2025. Section 41 four-part test enforcement has tightened in parallel. And every CPA with R&D credit clients is relearning the game in real time, while AI/ML companies - the fastest-growing segment of qualified claimants - flood the market with software development costs that may or may not qualify. This Playbook is for the practitioner who needs to get this right. Not a general overview. A working manual for qualifying, computing, and defending §41 claims for AI/ML clients in the post-OBBBA environment, with AI used as both subject (what counts as qualified research for AI development) and tool (how to surface QREs and draft audit-defensible technical narratives at scale). What's inside: Four-part test checklists for AI/ML projects - model architecture, training pipelines, fine-tuning (qualifying); prompt tweaking, off-the-shelf deployment (not qualifying) 27 sample QRE narratives covering common AI development patterns, ready to adapt Post-OBBBA §174 / §41 computation walkthroughs with worked examples AI-assisted documentation workflows that hold up under IRS exam Audit defense templates: substantiation memos, time-tracking frameworks, contemporaneous documentation protocols Engagement letter language and scoping templates for R&D credit work Red flags: positions that look qualifying but won't survive examination Written for: CPAs running R&D credit engagements, R&D specialty firm consultants, in-house tax directors at AI/ML companies, tax attorneys advising on §41 positions, and tax controversy attorneys defending §41 credits under examination.

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