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 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 2018 – 2021.

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