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CAFP Meeting January 2012

Learn about R&D Tax Credit opportunities to lower tax rates, generate cash flow, and qualify for federal and state incentives by engaging in qualifying activities and expenses. Industries like manufacturing, tech, and life sciences can benefit significantly. Real examples show potential credit amounts. The session covers the Four-Part Test to determine eligibility.

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CAFP Meeting January 2012

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Presentation Transcript

  1. CAFP Meeting January 2012 R&D Credit Opportunity = CASH Federal and State Tax Savings

  2. Overview • What Is the R&D Tax Credit? • What Industries Can Qualify? • Examples • How About You?

  3. What is the R&D Tax Credit? • The R&D Tax Credit provides PERMANENT benefits to drive down effective tax rates and generate CASH flow • Federal and State Incentives are available to companies that devote time and resources to developing new or improved products or manufacturing processes

  4. What is the R&D Tax Credit? • Qualifying Activities include: • Concept Development, Design, Engineering; • Software Development; • Experimenting  with New Materials; • Designing Tools, Molds and Fixtures; and, • Prototyping/Testing of Products and Manufacturing Processes

  5. What is the R&D Tax Credit? • Qualifying Expenses include: • Wages paid to employees that participate in the Qualifying Activities • Materials fully consumed in the Activities • Outsourced R&D • NET FEDERAL CREDIT usually equals 6% of Qualifying Expenses (State credits can also be significant)

  6. What Industries Can Qualify? • Manufacturing & Distribution • Certain Government Contractors (depends on specific contract language regarding risk) • Tech and Life Sciences • Financial Institutions (developing software)

  7. Examples • Packaging  Machinery Manufacturing • Sales $4 million…Credit $152,000 • Tool & Die • Sales $6 million…Credit $119,000 • Heavy Equipment Manufacturing • Sales $114 million…Credit $530,000 • Software Developer • Sales $2 million…Credit $280,000

  8. The Four Part TestPart 1: Can you put a check mark in any of the boxes below?

  9. Parts 2, 3 & 4

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