George v Commissioner Case
What it Means for R&D Tax Credits in Agriculture
Big news for farmers: you might qualify for Research & Development (R&D) Tax Credits.
A major poultry company (George's of Missouri) recently won a court case against the IRS that changed the rules for agricultural businesses. Here's what you need to know:
What happened? The IRS said poultry research didn't count as R&D. The court disagreed, and ruled that certain livestock and crop research does qualify for R&D tax credits because it involves biological science.
What does that mean for you? If your operation involves things like testing vaccines, improving breeding lines, studying feed or probiotics, and/or fighting disease in your animals or crops, you may beable to claim R&D tax credits and get money back, if the activities meet the four part test for R&D.
The catch? The poultry company left a lot of money on the table because their record-keeping wasn't thorough enough. The court couldn't award full credits without proper documentation. To protect yourself, you'll need to:
- Consider your research as you go, documenting what you can in real-time
- Track which employees are involved and for how long
- Be able to identify research costs vs. normal operating costs
The bottom line: Agricultural businesses have largely been ignoring a tax credit to which they may be entitled to. This court case opened the door, but businesses will need documentation to walk through it - and RK Partners can help with that.
What the George v Commissioner (T.C. Memo 2026-10) Means forAgriculture - In Detail
Agriculture businesses have long underutilized the R&D tax credit. George v Commissioner changes that.
IRC §41 has rarely been claimed by agricultural businesses, largely due to the assumption that these are reserved for labs, tech companies, pharmaceutical companies, or other “science” based operations.
R&D tax credit law has shifted since its permanent inception, with major shifts in just the past few years. Though this specific case revolved around George’s of Missouri, Inc., and its claims to research and development in its poultry business, the case established new definitions for what qualifies for these tax credits across the entire agricultural sector.
The George v. Commissioner Case: An Overview
George’s of Missouri, Inc. (GOMI) is one of the largest poultry producers in the United States, processing approximately 3.5 million birds per week. GOMI is a vertically integrated company, controlling nearly every step of production, from hatchery to processing plant.
Between 2012 and 2014, GOMI conducted a large range of R&Dwith the intent of improving health, efficiency, and performance in their flock. These included:
1. Vaccine efficacy trials comparing protocols on control and experimental flocks.
2. Antibiotic and probiotic studies to improve growth rates and survivability.
3. Genetic line selection experiments to determine best breeding lines to improve disease resistance and feed conversion ratios.
4. Disease prevention protocols to inhibit Marek’s disease, coccidiosis, and necrotic enteritis, and more.
GOMI claimed qualified research expenditures (QREs) forthese, which included employee wages, supply costs, feed costs, and overhead. The IRS disagreed with their claims, and escalated the case to U.S. Tax Court.
The IRS’s Argument
The IRS denied GOMI’s claims, arguing three points:
1. Lack of Technical Uncertainty.
The IRS contended that GOMI’s activities were routine production practices, not genuine research. As a position, they claim that if a farm has been vaccinating chickens for decades there is no uncertainty in the practice and it is just simple operating procedure.
2. No Systemic Process for Experimentation.
The IRS argued that GOMI could not demonstrate true “process of experimentation,” a vital piece of the four-part proof process for R&D tax credit. They claim they did not perform a structured, hypothesis-driven methodology required, and therefore GOMI was farming, not experimenting.
3. Feed Costs Don’t Qualify as Supplies.
The IRS challenged GOMI’s inclusion of feed costs qualifying as supply expenses. Under Treasury Regulation §1.41-2(b) supplies used in research can qualify, but the IRS challenged that feed is a routine input, not a research supply.
Not only did the IRS seek to solidify its claims that GOMI’s arguments were false, but they also sought accuracy-related penalties, arguing that GOMI had understated its tax liability and lacked reasonable cause to do so.
The Court’s Decision
The final decision was very favorable in relation to the qualifying activities and expenses. The tax court, however, stressed the importance of gathering and maintaining documentation.
The Wins
1. Agriculture qualifies under the "Technical in Nature" prong.
For the first time, the court held that livestock and poultry research qualifies as biological science under IRC §41(d)(1) because it does infact rely on the principles of biological science. This ruling effectively opens the door for agricultural producers whose work involves animal health, plant genetics, soil microbiology, feed science, and other biological studies to potentially qualify for R&D tax credits as longas all four parts of the qualification are met.
2. Controlled flock trials satisfy the process of experimentation.
GOMI’s use of experimental flocks and control flocks utilized differentprotocols and had different, measured outcomes, which constituted a valid process of experimentation. The systemic comparison of treatment groups leading to data collection and analysis was sufficient to satisfy the POE requirement.
3. Feed costs are upheld as qualified supplies.
The court ruled that feed qualifies as a supply expense under Treas. Reg. §1.41-2(b), citing that experiment birds themselves were “pilot models” under the regulations, meaning the feed was a necessary part of the R&D. This isa significant holding for any livestock operation in the research and development credit space.
4. The tax court awarded penalty relief.
Because GOMI had relied in good faith on the advice of a qualified tax consulting firm, it met the good faith exception under IRC §6664(c), and the IRS’s assessed penalties were not applied.
The Losses
Despite many favorable rulings in the case, GOMI lost a considerable amount of its tax credit claims due to inadequate records for the time period. The court applied a limited version of the Cohan rule, which is a legal doctrine that allows estimates when taxpayers do not maintain exact records, but the court applied a narrow application of the Cohan rule in this case. Without the proper documentation of activities, which employees participated in said activities, and how the taxpayer allocated all costs, the court lacked the basis to allow all research expenses that the taxpayer claimed.
What This Means For Agriculture Businesses
Documentation is important. Although there are many victories in the case, the taxpayer failed to produce the proper documentation to claim the full breadth of the tax credits. Ways to avoid this in your own business include:
1. Keeping contemporaneous records. Document as much as you can, when you can.
Document the complete scientific method, including hypotheses, methodology, expected outcomes, and final outcomes. Identify everything, including animals, acres,batches, experimental vs. control, etc. Track all outcomes, including weight gain/loss, mortality rates, disease incidence, yield, etc. Keep notes on conclusions and how results influence future decisions.
2. Track qualified costs separately so the IRS can see a clear, auditable trail connection expenses to qualifying activities.
Keep time records of all participating employees, even if informal. Separate tracking of supply costs for experimental animals or crops. Clearly define overhead costs allocated to research vs. production.
3. Distinguish R&D from routine production. Not everything you do will qualify, including routine vaccines, standard feeding, and established production protocols.
What RK Partners Can Do For Your Operation
R&D tax credits are difficult to navigate, and the George vs. Commissioner case proved it. There are likely to be more of these cases in the future, but this set an impressive precedent for livestock and agricultural businesses in the United States.
We can help you navigate your research documentation and make sure you’re taking advantage of every R&D tax credit you can in a complaint in efficient manner.
RK Partners is a uniquely niche firm dedicated to this one specific area of tax credits. We have a 100% success rate, and have not only found R&D credits for companies who didn’t even know they would qualify, but have found additional credits for people who had already had a consultant look into their options.
Our highly qualified tax attorneys, CPAs and consultants are here to talk to you about whether or not your business can claim R&D tax credits.
