• The 'discovery' test is out. Previous regulations required that taxpayers undertake research for the purpose of discovering information that exceeds, expands, or refines the common knowledge of skilled professionals in a particular field of science or engineering. This test has now been completely eliminated, and has been replaced by the simple requirement that research be “for the purpose of discovering information which is technological in nature."
  
  
• The 'process of experimentation' test is eased. Under the new regulations, requirements under the process of experimentation test are the same as those under Section 174. Therefore, “a process of experimentation may exist if a taxpayer performs research to establish the appropriate design of a business component when the capability and method for developing or improving the business component are not uncertain.”
  
  
• The recordkeeping requirements are eased. The new rules eliminate all special recordkeeping requirements for the research credit. Previous regulations imposed requirements that were roundly criticized as overly burdensome, and requiring unnecessary records.
  
  
• There is a new definition of 'internal use software'. Before internal use software (IUS) qualifies for the research credit, it must meet requirements that are in addition to those for other types of research. The new regulations make no significant changes in these additional requirements. However, the regulations change the definition of IUS. The new definition may make it difficult for Web-based software applications to qualify for the credit.

Professor Hardesty sums up by saying that these proposed regulations are very good news for taxpayers; and, so far, few serious criticisms have been raised by commentators.