It’s taboo for many agents if you copyright your work before submitting it to them. This is mainly because after it is sent to an editor, your original manuscript will be altered. You want to protect your work, but don’t want to pay a fortune for it. Well, the whole point of copyrighting, is to put a claim on a project that is your original work. What exactly holds up in a court of law to that extent? I’m afraid I don’t know the exact answer to that question, but if common sense ruled the day, I would say proof that you owned it before anyone else would. So send your manuscript to yourself via email. This would provide sufficient traceable, electronic documentation. Also on that same note; most query submissions are now done electronically, so you have proof of your work the minute you send it to an agency.
Another method would be to print your manuscript and take it to the post office. Mail it to yourself in an envelope and mention to the postmaster that you are mailing it to yourself for purpose of copyright, even though an actual copyright must be issued through the state. They will (should) then use brown tape to seal the envelope and stamp the date half on the tape and half on the envelope. Once you receive this in the mail, don’t open it. This is a legit claim of your work as it bears the date and address. If you alter your story at all, you can spend $10.00 to resend it to yourself as opposed to thousands. I know a musician who swears by it for his lyrics.
For more info on copyright works visit http://en.wikipedia.org/wiki/Copyright