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The R&D Tax Credit has long been one of the most powerful innovation-driven incentives in the tax code. While the core eligibility rules and definitions of qualified research expenses (QREs) have not changed, the reporting landscape has shifted, particularly with the introduction of a detailed Section G on the redesigned Form 6765.

Client Snapshot

Logo
  • Industry

    Engineering

  • Project Type

    R&D Credits

  • Project Objective

    Qualified Research Expenses

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Engineering Qualified Research Expenses and Compliance Positioning

Client Profile

The client is a large engineering services firm providing technical design and consulting solutions across multiple industries. Despite likely qualifying for the Research and Development (R&D) Tax Credit, the company had not claimed it.

The company also had not addressed the Section 174 capitalization rules. Our team was engaged to evaluate historical activities, quantify eligible expenses, and assist in aligning the client’s tax position with current regulatory requirements.

Process

Our R&D Tax Credit team conducted a detailed review of the client’s operations. Our team focused on identifying qualifying activities and associated expenditures across the 2022–2025 tax years. This included interviews with technical personnel, analyzing project-level documentation, and evaluating time-tracking data to identify the company’s qualified R&D projects.

Following the fieldwork, our team quantified eligible qualified research expenses (QREs) and prepared the necessary technical documentation to support the amended return filings. We worked alongside the client’s CPA to ensure alignment on filing positions. We also provided the required compliance statements related to Section 174 capitalization and 174A expensing.

In addition, our team assessed the client’s time-tracking processes. We recommended targeted adjustments to improve substantiation for future R&D Credit claims in anticipation of Section G reporting requirements. We designed the recommendations with current systems in mind, easing administrators’ burden while improving documentation.

Results

The engagement resulted in the identification and support of previously unclaimed R&D Credit benefits and improved compliance positioning:

  • Qualified Research Expenses (QREs): Over $2 million annually identified
  • R&D Tax Credits: Over $560,000 in total credits generated
  • Amended Returns: Prepared with supporting technical documentation
  • Section 174 & 174A Compliance: Statements developed and coordinated with CPA
  • Process Improvements:
    • Enhanced alignment of time tracking with R&D requirements
    • Practical adjustments to support future Section G reporting
    • The client is now better positioned to sustain and document R&D credit claims while maintaining compliance with evolving requirements.

  • $2 million

    Qualified Research Expenses (QREs) Identified

  • $560,000

    Total Credits Generated

Contact Us

McGuire Sponsel’s proven, trusted approach involves working with CPAs and their clients to build a credit claim that can withstand the highest levels of IRS or state scrutiny. Educating companies on the qualifying criteria and benchmarking against industry knowledge sets an expectation level for all parties early on in the process. Couple these with the fact that McGuire Sponsel works beside CPAs during the engagement ensures that the client is able to utilize the credits generated by an R&D Tax Credit Study. Our team of CPAs, Enrolled Agents, engineers, and consultants take the necessary time to work with clients to explain how the credit intersects with their business in order to optimize the credit claim while reducing exposure if audited.

Contact us today to learn more.

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