It is not surprising. The Service has stepped up their examinations in this area in recent years. Every research credit study needs to identify, the uncertainty or uncertainties for each business component and the steps taken to resolve those uncertainties. The Service does not accept mere handwaving and it is best to use original source documentation or a transcript of an interview to document this information. (Interview transcripts may be hearsay, but they allow witnesses to refresh their memories years later.) If the original study does not do so, the taxpayer has a very deep hole from which to escape. It sounds like this study was deficient in this respect.
-Brian
Director of Tax Accounting Methods & Credits
SourceAdvisors.com
Opinions my own.