Research and Development Tax Credit Overview & Benefits

What are the Potential Benefits of the R&D Tax Credit?

There are several benefits to realizing the R&D tax credit.
These benefits can include the following:

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
Increased in earnings-per-share
Reduction of your effective tax rate
Improved cash flow
Credit carried forward up to 20 years
Recent regulatory developments make claiming the R&D tax credit for companies much more feasible
Look back studies can recognize unclaimed credits for open tax years
(generally 3 or 4 years)

Technological in Nature

Activities must fundamentally rely on the principles of physical or biological science, engineering, or computer science.

Permitted Purpose

Activities must be performed in an attempt to improve the functionality, performance, reliability, or quality of a new or existing business component.

Eliminate Uncertainty

Activities intended to discover information that could eliminate technical uncertainty concerning the development or improvement of a product.

Experimentation

All of the activities must include a process of experimentation including testing, modeling, simulating, systematic trial and error.

KBKG Tax Insight: Research Credit Studies Can Expedite IRS Tax Audits

04/03/2020

As featured in Accounting Today Internal Revenue Service examinations of the research tax credit can burden both the client and the IRS. Throughout most of its decades-long history, research credit audits have exposed areas of misunderstanding and, in many circumstances, led to major disagreements. There is little “bright line” guidance, and each examiner must consider … Read More

KBKG Tax Insight: Architectural Firms Can and Do Qualify for the Research and Development Tax Credit

02/26/2020

Who says architectural firms can’t qualify for the research and development (R&D) tax credit? Not the United States Tax Court (USTC). The USTC recently granted summary judgment in favor of an architectural firm that claimed the R&D tax credit. At the heart of this judgment was whether Populous Holdings, Inc. (Populous) incurred contract research expenditures … Read More

KBKG Tax Insight: Words Matter When Describing R&D Credit Activities

01/08/2020

As featured in Accounting Today We’ve all experienced a situation where our intent and the meaning of something we’ve said or written was misinterpreted by the recipient. There are numerous articles available for many situations to help us avoid this problem, such as the how to ask the boss for a raise or the best … Read More

[PRESS RELEASE] Jonathan Tucker Joins KBKG as Director of Research & Development Tax Credits

08/29/2019

We recently added Research & Development Tax Credits Director Jonathan Tucker to our Southeast office‘s team of experts. Jon brings over 15 years of experience providing federal business tax advisory services to clients in various industries including technology, manufacturing, transportation, healthcare, retail and consumer products, hospitality, media and entertainment, financial and other professional services industries. … Read More

R&D Director Paul McVoy Relocates to KBKG’s New York Office

08/19/2019

We are excited to announce that we are expanding our New York City office in Midtown with the addition of Research & Development Tax Credit Service Director Paul McVoy, who is relocating from KBKG’s Pasadena Headquarters. While KBKG has had a strong presence in the New York City area for several years, Paul’s addition will … Read More

[INTERVIEW] Mark Bodenstab, Director of Research & Development Tax Credits

08/12/2019

We recently had the opportunity to interview our newest R&D Tax Credit team member, Mark Bodenstab. Mark joined KBKG after retiring from the IRS and will be a national Director providing services out of the Northeast office. In his role at KBKG, Mark will serve in a similar capacity to Jack Jolly who is a … Read More

[PRESS RELEASE] Former IRS Executive, Mark Bodenstab, Joins KBKG as Director of Research & Development Tax Credits

07/30/2019

Pasadena, California – July 30,2019 – Nationwide tax specialty firm KBKG adds another former IRS manager to their team of experts. Mark Bodenstab joins as the firm’s Director of Research & Development Tax Credits with over 30 years combined at the IRS and in the private sector. Mark joined the IRS as a general engineer … Read More

There’s Still Time to Claim the R&D Tax Credit on Extension [Infographic]

06/18/2019

Are you or your clients interested in claiming the R&D Tax Credit? Good news. There is still time to perform a study for inclusion on your extended returns, but you must act fast. Time is running out. What is the R&D Tax Credit? The Research and Development Tax Credit can be applied to qualified research … Read More

Have a Fat Tax Bill? Have You Thought About the R&D Tax Credit?

04/19/2019

Are you a business owner that is unhappy with your recent tax bill? If you have not explored it yet, the Research and Development (R&D) tax credit can provide significant benefits to your business’ bottom line. Chances are you could be missing out on a dollar-for-dollar reduction in your federal and state income tax liability. … Read More

Myth – Claiming R&D Tax Credit Increases the Likelihood of an IRS Audit

04/08/2019

The Research & Development Tax Credit is a federal benefit (also available in many states) that was enacted to promote growth, innovation, and inspire advancements in all areas and facets of business. The credit is an undoubtedly beneficial incentive for businesses large and small. However, many companies are hesitant to take advantage of the credit … Read More

What is the Research and Development Tax Credit?

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What are the Potential Benefits of the R&D Tax Credit?

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Additional Resources

Four-Part Test

Qualified research activities are defined by the four-part test outlined below