Research and Development Credits

Research and Development Credits

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The research and development tax credit (commonly referred to as the R&D Tax Credit) practice conducts retroactive studies, current year engagements, and risk advisory services. Our professionals combine an understanding of tax law with engineering disciplines to maximize companies' research credits and reduce their overall tax burdens. You organization will be provided documentation to withstand the highest level of IRS and state tax authority scrutiny.

What is the Research and Development Tax Credit (R&D Tax Credit)?

The R&D tax credit was enacted by Congress to keep U.S. businesses competitive in the global market and prevent job outsourcing. The PATH Act of 2015 made this credit permanent. Any business, regardless of size, that develops products or processes, including software, likely has R&D tax credits. There is a federal tax benefit between 4.5% and 6.5% per dollar of Qualified Research Expenditures (QREs).

R&D Tax Study Finds $133,064 in state and federal R&D tax credits for Contract Food Manufacturer

LBMC partnered with McGuire Sponsel to perform an R&D Tax Credit study for a contract manufacturer that specializes in developing new and improved formulations and manufacturing processes for the food industry.  Our team identified $2,205,106 of Qualified Research Expenses (QREs) for tax year 2016. The resulting benefit earned $133,065 in total tax credits.

Industry Specific Tax Credit Studies

A broad range of business activities qualify for R&D tax credits in various states as well as under the Internal Revenue Code. If your company operates in any of the following industries, you may benefit from an R&D tax credit study:

  • Aerospace
  • Agriculture
  • Apparel and Textiles
  • Architecture
  • Brewing
  • Building System Control
  • Chemical
  • Civil Engineering
  • Construction
  • Dairy Farming
  • Distilled Spirits
  • Electrical Contracting
  • Electrical Engineering
  • Electronics
  • Engineering
  • Environmental Engineering
  • Feed Mills
  • Firearms & Ammunition
  • Food & Consumer Packaged Goods
  • Foundries
  • Furniture & Cabinet Manufacturing
  • General Contracting
  • Job Shops
  • Life Sciences
  • Manufacturing
  • Mechanical Contracting
  • Mechanical Engineering
  • Medical Equipment Manufacturer
  • Metals
  • Oil & Gas
  • Plastics Injection Molding
  • Poultry
  • Product Engineering
  • Semiconductor-Electronics
  • Shipbuilding / Marine
  • Software
  • Structural Engineering
  • Telecommunications
  • Waste Management
  • Winemaking

Does your company qualify for the research and development tax credit?

In determining whether your business research activities qualify for the Research & Development Tax Credit, the activities must pass the four-part test:

  1. The goal has to be to discover some technological information that does not already exist
  2. There must be a level of uncertainty related to the product or process development
  3. Any costs must be directly attributable to what the IRS calls a “process of experimentation,” with no assurance of success
  4. The research must have a general business purpose

LBMC’s experts will aim to maximize research credits while providing defendable and conservative claims to the IRS. Contact us today to discuss what opportunities you have available.

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