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
- To claim the credit, a company must file Alaska Form 6390 – Alaska Federal-based Credits along with its state tax return.
Qualifications
More companies in Alaska can now qualify for the R&D tax credit. Companies are able to qualify R&D activities by beginning with the development of concepts and extending 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 open tax years.
Case Study
An Anchorage company designs and manufactures components for the oil & gas industry. The company claims Federal R&D credits each year for the development activities of its engineers. This project involved a multi-year study.
The Company qualified for the federal R&D Tax Credit of $330,000 and an additional $59,010 of state R&D Tax Credit in Alaska.
FEDERAL | ALASKA | ||||||
Year | Total QREs | Credit | Federal Credits | Alaska Credit | |||
2021 | $1,300,000 | $130,000 | $130,000 | $23,400 | |||
2020 | $900,000 | $90,000 | $90,000 | $16,200 | |||
2019 | $650,000 | $65,000 | $65,000 | $11,700 | |||
2018 | $450,000 | $45,000 | $45,000 | $8,100 | |||
Total | $3,300,000 | $330,000 | $330,000 | $59,400 |