Texas 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 Texas 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 software company in Austin, Texas began operations in 2006. The Company has steadily increased its research expenditures primarily through the addition of both experienced and inexperienced developers. The client has been claiming the federal R&D Tax Credit since 2009 and the Texas R&D Tax Credit beginning for tax-year ended December 31, 2013.

   
FEDERAL
 
TEXAS
Year
Total QREs
Credit
Total QREs
Credit
2014
$750,000
$75,000
$750,000
$24,583
2013
650,000
65,000
650,000
22,500
2012
500,000
50,000
500,000
NA
2011
400,000
40,000
400,000
NA
         
Total   $2,300,000 $230,000   $2,300,000 $47,083