What the Finalized Form 6765 Instructions Mean for 2025 Filers

The IRS released its finalized Form 6765 instructions on February 5, 2026. If you have been following the draft versions that have been circulating since late 2024, there are no major surprises. But finalization matters because it locks in the rules that apply to 2025 returns being filed right now, and it draws a clear line for what becomes mandatory starting with tax year 2026.

For companies currently finishing up their R&D credit calculations, there are a few things in these instructions that require attention before anything gets filed.

Section E: Required for Every Filer This Year

The most immediately relevant change is Section E, which is required for all filers for the 2025 tax year. This section is new. It functions as a risk-assessment profile for the IRS, giving the agency a structured snapshot of your claim before they look at the underlying calculations.

Section E asks for:

• Line 37: The total number of business components generating QREs. Not just the ones you will detail in Section G, but every component across the entire claim.
• Line 38: Total officer wages included in QREs. Officer compensation has always been part of the credit calculation, but this is the first time it has to be disclosed as a separate line item. Examiners will be able to see that number on day one.
• Line 39: Whether any QREs relate to a business acquisition or disposition during the year.
• Line 40: Whether any new categories of expenses were included in QREs this year that were not in prior base years. This is specifically designed to flag year-over-year changes that could indicate an expanded or shifted claim.
• Line 41: Whether you are using the ASC 730 Directive.

The ASC 730 item deserves a moment. Large companies that record R&D as a separate line item on audited financial statements can use those figures as the basis for their credit claim rather than rebuilding QREs from scratch. Line 41 tells the IRS you used that method, which also affects what Section G reporting looks like for your return.

None of these questions are difficult to answer if your records are organized. But they give the IRS meaningful context about your claim before an examiner has read a single project description. If any of your answers look unusual compared to your industry or prior filings, that is enough to generate a second look. Companies that have added new expense categories, acquired businesses, or significantly increased their officer wage allocations this year should be prepared to explain those changes.

Section G: Optional This Year, Mandatory in 2026

Section G, the business component-level disclosure that has generated the most industry discussion over the past two years, remains optional for tax year 2025. The IRS received enough stakeholder feedback requesting additional time that it extended the comment period on draft instructions through March 31, 2026. Final 2025-form instructions were published in February.

For tax year 2026, Section G becomes mandatory for most filers. The exceptions are narrow: qualified small businesses under Section 41(h)(3) electing the payroll tax credit, and taxpayers with QREs of $1.5 million or less and gross receipts of $50 million or less, measured at the control group level, filing an original return.

If you do not fall into one of those categories, you need to be building toward Section G compliance now. The form requires business components reported in descending order of QRE cost, covering 80% of total QREs or 50 components. For each component, wages must be broken into three categories: direct research, supervision, and support. Supplies and contract research must be allocated per component. And each component needs a description, not just a project code or name.

Companies that already track time and expenses at the project level will have a manageable path to compliance. Companies that do not have that infrastructure have a limited window to build it before the 2026 tax year closes. We have a detailed walkthrough of what Section G requires and how to approach the data collection if you want to get into the specifics.

Use 2025 as a Dress Rehearsal

Section G is optional this year, and a lot of companies will skip it because they can. That is understandable. But it is not necessarily the right call.

Completing Section G voluntarily for 2025 is a real test of whether your documentation infrastructure is ready for 2026. It will show you exactly where your data has gaps: which projects lack component descriptions, which wage allocations need to be broken out by activity type, which contract research expenses are not tied to specific components. Finding those gaps in 2025 gives you a full year to fix them. Finding them during the 2026 filing season means fixing them under deadline pressure while a mandatory disclosure requirement is already in effect.

There is also a defensive benefit to completing Section G voluntarily. A return that includes a well-prepared Section G signals to the IRS that your documentation is organized and your methodology is sound. That is not a guarantee against examination, but it is a different signal than a return that skips it.

Controlled Group Filers

One detail that is easy to miss: for companies that are part of controlled groups, Section G reporting is done at the entity level, not the group level. The 80%/top 50 calculation is based on your entity’s QREs, not the group’s aggregate. The IRS clarified this in the finalized instructions because it matters a great deal for companies with parent-subsidiary structures where R&D activity and expenditures are distributed across multiple entities.

What to Do Before You File

For 2025 returns being finalized right now: complete Section E in full, since it is required for every filer. Review your officer wage disclosure carefully before it goes in. Consider completing Section G voluntarily if your data supports it. If it does not, use this filing cycle to document exactly where the gaps are and assign someone to close them before the 2026 tax year ends.

For 2026 planning: if you do not have project-level time and expense tracking, building that system this year is not optional, it is urgent. Business component descriptions need to be written during the project, not reconstructed at year-end. Wage allocations need supporting data, not estimates.

Want to talk through what Section G means for your specific situation? Reach out. We would love to dig into it with you.

Jason Massie, CPA, Esq.

As the Founder and President of MASSIE R&D Tax Credits, Jason is responsible for the quality, consistency, and integrity of our services. His strategic vision and leadership drive innovation within the company, encouraging collaboration and ne...