Manufacturers: Take Advantage of Bonus Depreciation Incentives Before They’re Gone > Operations and Performance Improvement Services for Manufacturing and Distribution Companies > Case Study: Big Tax Credit for Research and Development

Case Study: Big Tax Credit for Research and Development

Scenario

Our client manufactures plastic molds in the upper mid-west. We spoke to our client about their research and development activities, informing them that many would qualify for the R/D credit. Any R/D credit would result in an immediate reduction of their tax liability.

Solution

During a plant tour, we pointed out elements of their operation that would qualify for the credit. For instance, we noticed that our client was using a laser molding machine to make prototypes. We also discussed the design work and experimentation that products required before they were ready for production. Based on our interviews, observations and discoveries, our research and development professionals were able to demonstrate that there was significant R/D involved with the client’s process and to show the client exactly what qualified for the credit.

Results

After the meeting, we completed a detailed analysis that resulted in a research and development credit of approximately $40,000 for the current year, plus similar amounts in the prior two years. These credits resulted in both a $40,000 reduction in the current year’s tax liability, and an $80,000 refund of prior year taxes.