Any expenses associated with the research and development of a company's goods or services. R&D expenses are a type of operating expense that can be deducted as such on the business tax return. This type of expense is incurred in the process of finding and creating new products or services.
Taobiz explains Research And Development Expenses
R&D expenses can be relatively minor, or they can easily run into the billions of dollars for large corporations. R&D expenses are usually the highest for industrial, technological, healthcare and pharmaceutical firms. Some companies reinvest a significant portion of their profits back into R&D, as they see this as an investment in their continued growth.