North Dakota R&D Tax Credit Case Study
The R&D tax credit is one of the most valuable credits leveraged by companies. The R&D credit yields billions of dollars in federal and state benefits to companies engaged in qualifying research. The R&D tax credit can provide a significant reduction to current and future tax liabilities and a source of cash.
Benefits
- Up to 13.5 cents of R&D tax credit for every qualified dollar
- Dollar-for-dollar reduction in your federal and state income tax liability
- Credit carried forward up to 20 years
Qualifications
More companies in North Dakota can now qualify for the R&D tax credit. Companies are able to qualify R&D activities beginning with the development of concepts and extend to the point where a product, process, formula, or other business component is ready to be commercially released. If you are engaged in any research activities, looking into a potential R&D tax credit may be a great benefit. In addition, look back studies can recognize unclaimed credits for the last 3 or 4 open tax years.
Case Study
A Fargo Company manufactures farming equipment. It had never before claimed the R&D Tax Credit for the development activities of its software programmers. This project involved a three-year study with a two-year look back to claim credits for years 2011 through 2013. The Company qualified for the federal R&D Tax Credit of $390,726 and an additional $516,329 in North Dakota state R&D Tax Credit.
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FEDERAL
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NORTH DAKOTA
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Year
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Total QREs
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Credit
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Total QREs
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Credit
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||
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2013
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$1,842,800
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$137,252
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$1,842,800
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$172,852
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||
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2012
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2,087,706
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96,160
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2,087,706
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194,894
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||
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2011
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1,842,800
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157,314
|
1,842,800
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148,583
|
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| Total | $5,503,651 | $390,726 | $5,503,651 | $516,329 | ||