CASE STUDIES
Engineering Firm
An engineering firm is an ideal candidate for the R&D tax credit. Engineers must rely on their technical knowledge to develop a design that accounts for environmental, customer, and regulatory constraints. If a firm had 20 engineers each making $100,000 and if each spent the majority of their time problem solving, then it would have $2 million in qualified research expenses. On average, $1 in expenses produces $0.065 in credit. Thus, this firm could produce a $130,000 credit. If the firm also amended its returns for the past three years, then the total credit could increase to $520,000.
Agricultural Firm
To remain competitive, agricultural firms must constantly improve their yield, combat disease, and efficiently move their product for distribution. Agricultural firms make a great candidate for R&D because of the significant supply costs involved that can be partially recouped. For example, feed costs used to test a crop can create millions of qualified research expenses. Thus, while a farm's qualified wages may not be more than $100,000, it may have supply costs of $2 million. Thus, it could produce a credit similar to the architectural firm above.
Apparel Firm
An apparel firm may think of itself as a primarily aesthetic business. However, significant technical challenges exist for any garment creator. There are concerns related to durability, flammability, and wear and tear. These firms clearly qualify for their technical efforts, and their supply costs in testing prototypes could also be significant potentially.