Alaska 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 Alaska 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

An oil company in Juneau, Alaska claims R&D credits every year for the development activities of its engineers. This project involved a multi-year study covering the tax years 2011 – 2014.  

The Company qualified for the federal R&D Tax Credit $327,833 and an additional $59,010 of state R&D Tax Credit in Alaska.

FEDERAL ALASKA
Year  Total QREs Credit Total QREs Credit
2014 $1,300,000 $135,333 $1,300,000 $24,360
2013 900,000 91,000 900,000 16,380
2012 650,000 63,000 650,000 11,340
2011 450,000 38,500 450,000 6,930
Total  $3,300,000 $327,833 $3,300,000 $59,010