--- title: "Ask Acena: The Four-Part Test’s Methods, Processes, and Techniques" description: Learn how to distinguish among methods, processes, and techniques when documenting R&D projects passing the IRS’ four-part test. This post breaks down the Permitted Purpose and Technical Uncertainty subtests with real-world examples. --- [Acena Blog - Industry Insight From Our Tax Experts ](https://www.acenaconsulting.com/blog) # [Ask Acena: The Four-Part Test’s Methods, Processes, and Techniques](https://www.acenaconsulting.com/blog/askacena-process) Written by [Laura Whittenburg, MSBME, Sr. Technical Writer](https://www.acenaconsulting.com/blog/author/laura) | Jan 27, 2025 3:01:59 PM We finished our series on the [four-part test](https://www.acenaconsulting.com/blog/four-part-test) that the Internal Revenue Service (IRS) uses to qualify research & development (R&D) activities for the federal R&D tax credit, formally called the [Credit for Increasing Research Activities](https://www.irs.gov/forms-pubs/about-form-6765). Businesses can claim this credit by documenting qualified R&D activities, capturing [qualified research expenses](https://www.law.cornell.edu/uscode/text/26/41#b_1) (QREs) – including wages for qualified services and supply costs – and reporting the calculated credit amount via [Form 6765](https://www.irs.gov/businesses/research-credit) when filing annual tax returns. We recently received a question from our readership, “How can I tell the difference between methods, processes, and techniques as I document my R&D projects?”  Let’s answer this question while reviewing the four-part test. We can immediately mitigate some complexity by considering each subtest individually.  ##### **Permitted Purpose** The [**Permitted Purpose**](https://www.acenaconsulting.com/blog/permitted-purpose) subtest asks, “What is the intended outcome of R&D activities?”  To qualify, R&D activities must innovate or improve a **business component** held for sale, lease, or license to taxpayers, or intended for taxpayers’ use during business or trade. 26 U.S. Code (USC) § 41(d)(2) [lists](https://www.law.cornell.edu/definitions/uscode.php?width=840&height=800&iframe=true&def_id=26-USC-21319837-1530790099&term_occur=999&term_src=title:26:subtitle:A:chapter:1:subchapter:A:part:IV:subpart:D:section:41) the qualified types of business components. Among the possibilities are both **processes **and **techniques**. But what is the difference between them? The answer is subjective – formally undefined among the tax codes and regulations – but here are the criteria we use in house. - Processes are ordered actions or steps to achieve an outcome. In other words, processes structure the overall strategy or workflow. - Example**:** A manufacturing company creates a new process for product assembly product that calls for a custom order of operations or steps, facilitated by robotic arms. - Techniques are specific methods or procedures to achieve an outcome. - Example: During the aforementioned manufacturing process, a new technique is developed to weld two components using a laser instead of traditional welding methods. In summary, processes are broader in scope than techniques. A single process can encompass multiple techniques. Processes focus on the overall flow and sequence of activities, while techniques focus on the specific actions and methods used during one step. *But what about the difference between methods and techniques?* This question can be confidently disregarded because both methods and techniques are not options for business components. ##### **Technical Uncertainty** The four-part test mandates that qualified R&D seeks to eliminate [**Technical Uncertainty**](https://www.acenaconsulting.com/blog/technical-uncertainty).  Technical Uncertainty exists if the available information to the taxpayer (e.g., your business) does not address specific unknowns, including the **appropriate design** or **method **for creating or improving the business component. Let’s explore how these uncertainties may apply to the same theoretical project. A civil-engineering consultancy is tasked with restoring a coastal wetland, affected by an oil spill. - Appropriate design refers to a process' blueprint.  - Example: The R&D team does not know what methodical permutation (i.e., set of ordered steps) would most effectively rehabilitate the biodiversity and the ecosystem's functionality. - Method refers to the means of completing a process. - Example: The R&D team does not know how to most effectively perform a step (e.g., controlled burning, invasive species removal, or reforestation) called for by the elected restoration design. Do you still have lingering questions? *Solicit a second opinion!* At Acena Consulting, R&D tax credits are our bread-and-butter business, 365 days a year. Our team of tax professionals includes CPAs who have partnered with startups and Fortune 500 companies, as well as engineers who understand the scientific questions underlying your operations.  [Schedule a free consultation today](https://meetings.hubspot.com/randy-eickhoff?uuid=41df5cd2-5d98-43bc-8e39-d9e0fe9f8c79&__hstc=135015022.d652028c05328375e4453175812cef77.1726500807997.1735319588192.1735324257232.123&__hssc=135015022.6.1735324257232&__hsfp=3011104808) to receive immediate assistance from [Randy Eickhoff, CPA](https://www.linkedin.com/in/randyeickhoffcpa/), Acena's Founder & Head Coach. ##### **Stay Informed** Interested in building your professional fluency in R&D tax incentives? - [Sign up for our free, interactive webinar](https://www.acenaconsulting.com/cracking-the-tax-code-for-rd-interactive-workshop) on **February 18**: “Cracking the (Tax) Code for R&D.” - This workshop provides **one CPE credit** for professionals keeping up with continuing education. - Subscribe to our newsletter to send industry insights from our experts directly to your inbox. // Edited by [Randy Eickhoff, CPA](https://www.linkedin.com/in/randyeickhoffcpa), Founder & Head Coach at Acena Consulting. Photo courtesy of ESO/M. Kornmesser (i.e., European Southern Observatory) on Flickr. [View full post](https://www.acenaconsulting.com/blog/askacena-process) ```json { "@context" : "http://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Laura Whittenburg, MSBME, Sr. Technical Writer" }, "dateModified" : "2025-01-27T15:19:17.841Z", "datePublished" : "2025-01-27T15:01:59Z", "headline" : "Ask Acena: The Four-Part Test’s Methods, Processes, and Techniques", "image" : { "@type" : "ImageObject", "height" : 800, "url" : "https://www.acenaconsulting.com/hubfs/26786070159_74ab22fdbc_o.jpg", "width" : 1280 }, "mainEntityOfPage" : "https://www.acenaconsulting.com/blog/askacena-process", "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "height" : 60.0, "url" : "https://www.acenaconsulting.com/hubfs/acena-logo%20only%20no%20background.png", "width" : 54.000004 }, "name" : "Acena Consulting Blog on US Tax Incentives" } } ```