Research and Development Credit:
Capturing the value in the era of tax reform
With tax reform now implemented and a good number of federal incentives either eliminated or reduced, most companies are not aware or have forgotten about capturing the value from the R&D credit. Here are a couple of items to remember on the R&D Credit for 2018.
- Corporate rate down, R&D credit rate up: Since the corporate was reduced to 21%, most companies claiming the R&D credit under the “reduced” amount will get a bump in their R&D credit for 2018. For some companies, this could be a jump of the R&D credit of almost 40%.
- AMT out, more R&D credit utilized: With corporate AMT being eliminated, more companies will have the opportunity to utilize the R&D credit, because it is not limited by AMT anymore.
- Don’t forget software development and process improvements: Most of the time, CFO Services is helping clients identify the areas that qualify for the R&D credit. Two of the areas that we identify in addition to traditional R&D are software development and process improvements. In today’s economy, we are all building “technology” into our products and processes, which in turn drives innovation and builds efficiencies. These resources can qualify for the R&D credit, which in some cases is significant.
Iowa enacts legislation on the R&D credit, limiting the type of industries
In May, the state of Iowa enacted legislation (SF 2417), which among other things, adjusts the state’s R&D credit to only apply to businesses engaged in “manufacturing, life sciences, software engineering, or aviation and aerospace”. It also specifically excludes certain industries such as agricultural production and types of “contractors”. With Iowa having a large agricultural economy, clients should contact us to discuss if they fall within a certain industry for the R&D credit.
Multi-State Incentives Highlight:
At CFO Services, we are continually looking to help our clients with credits and incentives. All 50 States and many local communities have some sort of tax or financial incentive programs designed to stimulate investment, job growth and economic development. Credits & Incentives can make a big impact on site selection as well as the bottom line. Examples include Investment and/or Job tax credits, sales tax refunds, property tax abatements, training funds and infrastructure grants or even straight cash or land, just to name a few. Most programs have various thresholds to meet along with a compliance reporting period but the benefits are often significant.
CFO Services’ Multi-State practice identifies those opportunities through expert analysis of project-specific information derived from our survey process. The next phase of the process Identifies which incentives are the best fit through our comprehensive Research and concludes with Filing of the application including the negotiation, implementation and incentive compliance reporting.
In our next edition of the newsletter, we start highlighting a state’s incentives and items that we can help with along the way.
Top 5 items you probably did not know about CFO Services and technology.
- CFO Services can help you build workstreams for your SharePoint environment
- We have a mobile app, that you can utilize for certain credits and incentive services
- Our clients are provided technology with every engagement
- CFO Services uses its own technology
- Clients work with CFO Services for its consulting, technology or a combination of both
2018 Conference sponsorship and presentations:
CFO Services, is constantly out across the country reaching out to clients at conferences and events. In addition, we are speaking and helping to build knowledge through the tax community on credits, incentives, and technology. Check out some of the events in 2018, and don’t forget to stop by if you are at one of these events.
- February 2018: NJ TEI Chapter Day
- “Purchased State Credits: Too Good to be True & How not to lose them”
- February 2018: Houston TEI Tax School
- May 2018: Association of Computers and Taxation annual conference
- “Cloud Computing and Maximizing Credits and Incentives”
- June 2018: Southeast regional TEI conference (Hilton Head)
- June 2018: West regional TEI conference (Phoenix)
- More to follow in 2018