Five Questions With Baker Tilly Tax Principal Michelle Abel

Bloomberg Tax Insights & Commentary is featuring a recurring questionnaire of prominent tax professionals who are willing to share their thoughts about their work and the practice of tax these days. Today we feature Michelle Abel, a principal and firm leader of credits and incentives in Baker Tilly’s specialty tax practice.

What tax case is no one watching that they should be?

One case is Harper v. Commissioner, a 2023 US Tax Court case involving the research credit that favored the taxpayer. It addressed whether construction-related designs, engineering plans, and similar design deliverables could qualify as “business components” for purposes of the research and development credit.

When most people think about the R&D credit, they think of software, pharmaceuticals, or manufactured products. But Harper expanded the conversation by recognizing that innovation in construction design and engineering can also qualify. Many companies in those industries may not realize their activities could support an R&D credit claim, when they could actually have favorable tax positions related to these activities.

More broadly, taxpayers should be watching the R&D cases that continue to reinforce the importance of contemporaneous documentation supporting qualifying development activities and their relationship to development expenses. Taxpayers can have strong technical arguments prepared years after engaging in qualified development activities, but if the supporting records weren’t created during the time of the research process, defending the credit becomes much more difficult.

What tax issue keeps you up at night?

Seeing companies wait too long to think about documentation for research credits.

A lot of businesses focus on the tax credit only after the research activities are complete or after an IRS examination begins. By then, it can be incredibly difficult to recreate the records needed to support the claim.

There’s a huge opportunity for practitioners to advise clients proactively, while the research is actually happening, so they can prepare the robust documentation they’ll eventually need years later to successfully retain the credits claimed.

The earlier that companies involve tax advisers in that process, the more time, cost, and frustration they can save if the credit is ever challenged.

What’s the biggest lesson you learned in your early years of practice?

That there is always someone smarter or more experienced who can teach me technical nuances or help me see an issue from a different lens.

Tax is an incredibly complex and constantly evolving field, and no one should approach difficult issues in isolation. Collaboration is essential, not only because a second set of eyes is valuable, but because every new issue presents an opportunity to learn from someone who has encountered it before.

Even after years of practice, I still believe the best outcomes result from asking questions, collaborating with colleagues, and challenging my own assumptions.

What is one section of the tax code that you’d like to change?

I would simplify the disconnect between Sections 174 and 41 of the Internal Revenue Code. Section 174 governs the deductibility of research and experimental expenditures, while Section 41 governs the ability to claim the research credit.

In practice, taxpayers often evaluate these provisions together because they require evaluating the same activities. However, the inconsistent requirements create confusion and administrative complexity.

It would be far more efficient if the definitions and qualification standards aligned more closely. Taxpayers frequently find themselves qualifying under one provision but not the other, despite analyzing the same underlying activities.

What was the last thing you believed beyond a reasonable doubt?

That everything changes. Tax law, technology, and the way we work are constantly evolving. Just when you feel like you have mastered a technical topic, new legislation, new guidance, or emerging technologies (including AI) reshape the landscape again. Practitioners can never stop learning through these changes. Staying curious and continuously adapting is essential in this profession.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

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