Form 6765 Section G: What Changed and Who Must File It

The IRS did not simply add pages to Form 6765. It changed what the form is. For decades the research credit return was a computation: total your qualified research expenses, apply a formula, report a number. The revised form asks you to show the work, business component by business component, on the return itself.

That is Section G. Here is what it asks for, who must file it, when, and what to do between now and then. The governing documents are Form 6765 (Rev. December 2024) and the Instructions for Form 6765 (Rev. December 2025).

What the revision actually changed

The prior December 2023 form was two pages and four sections: Regular Credit (A), Alternative Simplified Credit (B), Current Year Credit (C), and Qualified Small Business Payroll Tax Election (D). Expense detail sat inside the computation twice, at lines 5 through 8 of Section A and again at lines 24 through 27 of Section B.

The revised form runs four pages. Sections A and B were not moved or renamed. Everything around them was:

Items A and B now sit at the top of page 1. The section 280C reduced-credit election, once buried at lines 17 and 34 of the computation, is now Item A; the controlled group question at Item B is new to the form.
Sections A and B lost their expense lines. Each now carries a single entry, “Total qualified research expenses (QREs). Enter amount from line 48,” at line 5 and line 20 respectively.
Sections C and D are substantially the old C and D, renumbered to lines 27 through 32 and 33 through 36.
Section E - Other Information (lines 37 through 41), Section F - Qualified Research Expenses Summary (lines 42 through 48), and Section G - Business Component Information (lines 49 through 56) are all new. Section G occupies pages 3 and 4.

Section E and the gate question in Section F

Section E must be completed by anyone reporting QREs on line 48. It asks five things: the total number of business components generating your QREs (line 37), officers’ wages included in the line 42 total (38), whether you acquired or disposed of a major portion of a trade or business (39), whether you included new categories of expenses as current year QREs (40), and whether you are following the ASC 730 Directive, available only to taxpayers with $10 million or more in assets using U.S. GAAP certified audited financial statements (41).

Line 37 deserves a second look. It requires the count of all components, “not just the limited number of business components you may be reporting in Section G.” Even a filer exempt from Section G must count and report its components.

Section F then consolidates the QRE summary once for the whole return: wages (42), supplies (43), rental or lease of computers (44), contract research (45), basic research payments (46), and totals (47 and 48). It also carries the gate, Item A: “Are you required to complete Section G?” The sequencing runs backwards from how the form prints. Complete Section G first unless exempt, then pull the Section F totals from columns 53 through 56.

What Section G asks for, column by column

Section G has two blocks: the first identifies each business component, the second assigns dollars to it. The printed grid holds fifteen; paper filers attach additional sheets for more.

Identification, columns 49(a) through 49(f):

49(a) and 49(b) - the EIN of the entity (the controlled group member, where one applies) conducting the research on this component, and that entity’s principal business activity code.
49(c) - the component’s name or unique alphanumeric identifier. The instruction here is the one to read twice: the field “should be populated with an identifier that is consistent with how you maintain the books and records that substantiate the qualified research activities and associated QREs.”
49(d) - the component type, from three options only: Product, Process, or All Others (which includes computer software, technique, formula, or invention).
49(e) - if the component is software, its classification: internal use software, dual function software, non-IUS, or excepted from IUS treatment.
49(f) - a description of the information sought to be discovered. This column currently applies only to amended returns. You are “not required to complete column 49(f) for timely filed original tax returns including extensions.”

Dollars, columns 50 through 56: direct research wages (50), direct supervision wages (51), direct support wages (52), total qualified wages (53), cost of supplies (54), rental or lease cost of computers (55), and the applicable amount of contract research expenses (56).

That wage split is where most companies are least ready. The three buckets track the categories of qualified services in section 41(b)(2)(B), and Section G asks for them per component, not per person or per department. Our qualified research expenses guide covers what belongs in each.

The 80% / Top 50 rule

You do not report every component. The instructions require all of columns 49(a) through (f) and 50 through 56 “for at least 80% of your total QREs by business component, but report no more than 50 business components.” They call this the “80%/Top 50,” and components must be listed in descending order by total QREs per component, determined at the controlled group level unless a special rule says otherwise.

It is commonly misread as a cap on detail; it is not. You sort components largest to smallest and work down until cumulative QREs reach 80% of the total, stopping at 50 even if you have not reached 80%. Whichever limit you hit first ends the list.

The rest are not dropped. Remaining components go on a single line: enter “Aggregate Business Components” in column 49(c) with the aggregate amounts in columns 50 through 56, leaving other columns blank.

Three special rules worth knowing

Controlled group members filing separate returns report at least 80% of their own total QREs, not the group’s, and no more than 50 of their own components.
The ASC 730 Directive single entry. If you checked “Yes” on line 41, you make one entry labeled “ASC 730 Directive” in column 49(c), with Appendix B amounts (column A only) in columns 53 through 56 totaling line 41. It does not count toward the 80%/Top 50, but if it is at least 80% of line 48, no further components are required.
Statistical sampling under Rev. Proc. 2011-42 remains available but does not shrink Section G. You report the 80%/Top 50 “irrespective of which business components were used for your statistical sample,” append the word “sample” to sampled component names in column 49(c), and attach your sampling plan. The warning that follows is worth quoting: “The filing and acceptance by the IRS of your Form 6765 does not constitute acceptance by the IRS of your statistical sample as adequate substantiation for a return position.”

When Section G becomes required, and for whom

This date has already moved once, which is why much commentary online is stale.

IR-2024-171 (June 21, 2024) made Section G optional for all filers for tax year 2024, effective for tax year 2025.
IR-2025-99 (October 1, 2025) pushed it out another year: optional for all filers for tax year 2025 as well, and mandatory for tax year 2026 (processing year 2027) and beyond.

The current instructions state it in tax years rather than processing years: “For tax years beginning before 2026, Section G will be optional for all filers,” and “For tax years beginning after 2025, Section G will be required.”

When it becomes required, the instructions carve out two categories. “Section G is required unless:”

You are a qualified small business as defined under section 41(h)(3) and you checked the box to claim a reduced payroll tax credit; or
Your total QREs, determined at the controlled group level, on line 48 are $1.5 million or less; and your average annual gross receipts for the prior three tax years are $50 million or less, as determined under section 448(c)(3) without regard to subparagraph 448(c)(3)(A); and you are reporting the credit on an original return.

Three things get misread here. The second exception is conjunctive: all three conditions have to hold, so being under $1.5 million in QREs is not enough on its own. The QRE test runs at the controlled group level, so a small subsidiary inside a large group does not qualify on its own numbers. And an amended return breaks the exception while simultaneously switching on column 49(f).

Nothing in the exception turns on whether you compute under Section A or Section B; it keys entirely to line 48 QREs, gross receipts, and return type.

What the draft asked for and the final form does not

Guidance written off the September 2023 preview still circulates. That preview asked whether a component was new or improved, whether it was a sale, license, or lease, and for a narrative describing the information sought to be discovered on original returns. Per IR-2024-171, the IRS eliminated all three, reduced the component type selections, and cut the number of components reported. The preview also labeled the section as Section F. If a checklist asks you to flag components as new or improved, it describes a form never issued.

Why the IRS did this

The agency’s own framing: the changes “alleviate taxpayer burden, provide taxpayers with a consistent and predefined format and improve the information received for tax administration.”

Read that next to the refund claim requirements and the design becomes obvious. For claims postmarked after June 18, 2024, a valid research credit refund claim must identify all business components the claim relates to, identify all research activities performed for each, and provide total qualified wage, supply, and contract research expenses. Two earlier items, the names of the individuals who performed each activity and the information each sought to discover, were waived at filing, though the IRS may still request them on examination. IR-2025-99 extended the transition period, which gives taxpayers 45 days to perfect a timely but deficient claim, through January 10, 2027. The claim-filing side of this is covered in more depth in our documentation and audit-readiness guide.

The data model is identical on both sides: component, activities, dollars. Section G moves it onto the original return, which is a change in kind. Component-level substantiation used to be an audit-defense artifact you could assemble under pressure. It is becoming a filing input, and you cannot populate columns 50 through 56 next spring for a year in which nobody recorded which product an engineer was working on.

How to prepare, starting with the current year

None of this requires new software. It requires deciding now what your components are and making existing systems answer to them.

Fix the component list first. Product, process, computer software, technique, formula, or invention. The four-part test applies separately to each component under section 41(d)(2)(A), so the list is not an administrative detail; it is the structure of the whole claim. See our four-part test guide.
Name components the way your books already name them. A tax file that invents project names appearing nowhere in Jira, your ledger, or your engineering docs creates a reconciliation problem for nothing.
Track time at component granularity, preserving the three wage buckets. Conducting, directly supervising, and directly supporting are separate columns. A single blended “R&D percentage” per employee cannot be split into them after the fact.
Tag non-wage costs to components too. Contract research in particular sits in vendor accounts never mapped to a project.
Classify software components early. Column 49(e) forces a formal position on internal use software.
Know which side of the threshold you are on. Run the $1.5 million QRE test at the controlled group level, and the $50 million gross receipts test, before assuming the exception applies.

A component-first study makes Section G mostly transcription. A credit computed from department totals does not, and building that structure prospectively costs far less than reconstructing it. Our documentation guide covers the evidence side; the platform overview shows how we build a study around components.

Questions on eligibility and methods are covered in our R&D credit FAQ. Treat the dates and thresholds above as a snapshot: the phase-in has been revised once already, so confirm against the current-year instructions before relying on an exception.