Massachusetts 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 Massachusetts 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 life sciences company in Boston, Massachusetts with fewer than 100 employees had never before claimed the R&D Tax Credit. This project involved a multi-year study covering the tax years 2012 - 2014. The Company qualified for the federal R&D Tax Credit of $312,666 and an additional $81,250 in Massachusetts state R&D Tax Credit.

   
FEDERAL
 
MASSACHUSETTS
Year
Total QREs
Credit
Total QREs
Credit
2014
$1,400,000
$141,166
$1,400,000
$43,750
2013
1,000,000
98,000
1,000,000
25,500
2012
750,000
73,500
750,000
12,500
         
Total $3,150,000 $312,666 $3,150,000 $81,250