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.

  
FEDERAL
 
IOWA
Year
Total QREs
Credit
Total QREs
Credit
2013
$2,387,778
$95,853
$2,387,778
$30,827
2012
2,258,977
75,843
2,258,977
24,646
2011
2,598,748
87,338
2,598,748
43,669
     
Total$7,245,503$305,063$7,245,503$99,145