Virginia 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 Virginia 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 firm in Norfolk, Virginia designs components for the maritime industry. The company claims R&D credits each year for the design and 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 $196,000 and an additional $98,235 in Virginia state R&D Tax Credits.

   
FEDERAL
 
VIRGINIA
Year
Total QREs
Credit
Total QREs
Credit
2014
$750,000
$70,000
$750,000
$35,100
2013
550,000
45,500
550,000
20,625
2012
500,000
42,000
500,000
21,000
2011
450,000
38,500
450,000
21,510
         
Total   $2,250,000 $196,000   $2,250,000 $98,235