| Items that Qualify | Items that do not Qualify a |
| Costs incident to the development of an experimental or pilot model, a plant process, a product, a formula, an invention. | Expenditures for ordinary testing or inspection of material or products for quality control purposes. |
| Costs associated with product improvements. | Efficiency surveys and management studies. |
| Costs of obtaining a patent, such as attorney fees. | Marketing research, advertising, and so on. |
| Research contracted to others. | Cost of acquiring another person's patent, module, production, or process. |
| Depreciation or cost recovery amounts attributable to capitalized R&E items (e.g., research laboratory and equipment). | Research incurred in connection with literary, historical, or similar projects. |
a Certain of these expenses may be deductible as trade or business expenses under Section 162, subject to amortization under Section 197, or treated as start-up expenditures under Section 195