Judge Christian N. (“Speedy”) Weiler is the judge for the job in Adrian D. Smith and Nancy W. Smith, et al., T. C. Memo. 2026-50, filed 6/16/26, as he unveils the tax treatment of these various Mideastern research projects of these world-famous architects.

Key points: Loss of potential profits on premature termination do not render research unfunded; payment for work to date is sufficient. Merely meeting commonly-agreed standards is insufficient; detailed specifications, itemized criteria, and. numerous checkpoints (like 1,000 pages of specifications) which must be met are necessary for unfunded Section 41’s ultra-guided largesse. Pre-Loper Bright cases deferring to Chevron are still good law, and Judge Speedy Weiler follows them. The architects do get the lower Reg. Section 1.41-4A(d)(3) substantially retained rights to the research credits in four (count ’em, four) of the six (count ’em, six) exemplars.

The independent investor test for reasonableness of compensation to researchers is the test under Section 174, even though a carryover from Section 162 learning. Here, however, the record is too scanty for Judge Speedy Weiler to do the numbers. Taishoff says, settle this out guys, talk among yourselves.

Contract drafting is the key. Specialists should read and heed, especially when amending or terminating. And choice-of-law clauses only work when contract terms are ambiguous, so be prepared to show chosen law definitely impacts the written contract (and if chosen law does, why the contract wasn’t drafted accordingly).

A Taishoff “Good Job” to the Smith-Gill trusty attorneys for rescuing as much of this desert storm as they did.