Iowa 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 Iowa 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 company in Des Moines had previously taken the Research Activities Credit but had not done so in recent years. This project involved a three-year study to claim credits for years 2011 through 2013. The Company qualified for the federal R&D Tax Credit of $305,063 and an additional $99,145 in refundable Iowa state R&D Tax Credit.
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FEDERAL
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IOWA
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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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||
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2013
|
$2,387,778
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$95,853
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$2,387,778
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$30,827
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||
|
2012
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2,258,977
|
75,843
|
2,258,977
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24,646
|
||
|
2011
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2,598,748
|
87,338
|
2,598,748
|
43,669
|
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| Total | $7,245,503 | $305,063 | $7,245,503 | $99,145 | ||