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CAFP Meeting January 2012

CAFP Meeting January 2012. R&D Credit Opportunity = CASH Federal and State Tax Savings. Overview. What Is the R&D Tax Credit? What Industries Can Qualify? Examples How About You?. What is the R&D Tax Credit?.

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CAFP Meeting January 2012

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  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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