Dallas Business Journal Interviews The KBKG Director of R&D Tax Credits
The Dallas Business Journal interviewed Bruce Stubbs, Director of R&D at KBKG Inc., in an article titled "Extra Credit for Innovation". In the interview, Bruce recommends using a time tracking system for employees who are involved in R&D. "Anybody that touches the project, you want to be able to track the amount of time and activity they're doing on the project, whether it's designing the prototype or testing it. In addition, keep track of the cost of building prototypes, the materials and supplies, and document how those expenses go into the projects."
The article highlights Genbad Inc. with around 700 of its 1,700 worldwide employees involved in R&D. "Historically, we've gotten tax credits that are in the range of $7,000 to $8,000 per R&D (worker)," [Charlie Vogt, president and CEO] said. That suggests Genband could get as much as $4.9 million to $5.6 million of tax credits for its R&D work… as a rule of thumb, businesses can expect savings of 4.5 percent to 6.5 percent of whatever they spend in R&D. Thus a hypothetical business that invests $1 million in R&D on widgets could typically expect to reap tax savings of $45,000 to $65,000."
Dallas Business Journal also reported that Texas Instruments Inc. "used R&D tax credits to reduce its current U.S. federal tax bill by $58 million, cutting the amount owed to $692 million for the 2011 fiscal year… TI secured $54 million in R&D tax credits in 2010 and $28 million in 2009."
Action Step: If you or your company is interested in taking advantage of the R&D Tax Credit, please contact us today for a FREE quote and an estimated benefit of your potential tax savings. KBKG can also assist with implementation of a time tracking system for employees actively involved in R&D.
Author: Dallas Business Journal. Commentary by: Bruce Stubb.