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Is Your Company Leaving Money on the Table?

October 9, 2014

You may have heard that only large, high-tech companies are eligible for the research and development tax credit. The rumor is simply untrue.

The R&D tax credit—a dollar-for-dollar credit designed to free up cash for growth initiatives—applies to any size entity that performs R&D activities. Qualifying activities range from the creation of innovative products to the development of new or improved processes or prototypes; qualified research expenses include wages, supplies and contracted research.

Yet according to an article in the May 2014 issue of MNCPA Footnote, only 1 of every 20 Minnesota companies eligible for the R&D tax credit actually takes it. Needless to say, valuable dollars are being left on the table.

Consider an R&D credit study
It’s easy to go about your day-to-day business activities without realizing which ones may be eligible for the credit. This is where an R&D credit study can help.

An R&D credit study can help you identify R&D activities that qualify for the credit. The study may also uncover potentially forgotten projects and expenses, ensuring these dollars aren’t left on the table either. Plus, it serves to back up your credit claim should the IRS choose to examine it.

Our role as the study provider
In addition to identifying R&D activities, we can assist with documentation necessary for substantiating related R&D expenses and help calculate the credit. What’s more, we can determine if an R&D credit study makes sense for your company.

Don’t leave dollars behind!
The last R&D credit study we performed for a client resulted in over $50,000 of credit between federal and state tax liabilities. That’s a lot of money to be left sitting on a table. So if you’re wondering how an R&D credit study could benefit your company, don’t hesitate to give us a call. We’re happy to answer your questions.

Andrew Thom, CPA, CPE, is AEM’s Manufacturing Segment Leader. When he’s not navigating southern Minnesota waterways in his kayak, he’s helping clients navigate changes in their business. You can reach Andy at 507.304.6830 or at

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