Arizona 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 Arizona 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 chemical manufacturing company in Tucson, Arizona qualified for a substantial credit. The company claims R&D credits each 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 Credits of $233,800 and an additional $306,000 in Arizona state R&D Tax Credits.
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FEDERAL
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ARIZONA
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Year
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Total QREs
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Credit
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Total QREs
|
Credit
|
||
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2014
|
$750,000
|
$63,000
|
$750,000
|
$90,000
|
||
|
2013
|
700,000
|
62,767
|
700,000
|
84,000
|
||
|
2012
|
650,000
|
65,100
|
650,000
|
78,000
|
||
|
2011
|
450,000
|
42,933
|
450,000
|
54,000
|
||
| Total | $2,550,000 | $233,800 | $2,550,000 | $306,000 | ||