McGuire Sponsel worked with a defense and aerospace manufacturer to perform an R&D Tax Credit study to maximize benefit.

 

In this episode, host TJ Sponsel and guest David Seibel discuss the numerous state R&D Credits that are available for taxpayers in addition to the federal R&D credit. These credits are meant to encourage and incentivize research activities within state borders.

We often see companies in software development, architectural and engineering services, aerospace, and other industries utilize sophisticated time-tracking systems for employees to accurately log time spent on projects. For a business with qualified Research & Development (R&D) projects, this data can become the backbone of an R&D Tax Credit study and claim.

This Tax Season has been marred by confusion over many specialty tax issues. Join Dave McGuire and TJ Sponsel as they discuss how the delay of passage of the Tax Relief for American Families and Workers Act is affecting 174 amortization, bonus depreciation, and 163(j), leaving many CPAs and their clients in limbo.

This week on Let’s Talk Tax, hosts ⁠TJ Sponsel and guest Kyle Riddle overview the progression of the R&D Tax Credit over the last 18 months.

The Research and Development (R&D) Tax Credit provides valuable incentives for innovation across industries, including agriculture. However, not all farms are eligible for this tax credit.

Over the last 16 months, McGuire Sponsel has intentionally educated CPAs and clients on the dynamics of 174 amortization. Given the firm’s R&D Tax Credit Practice, we understand our role in addressing the problematic tax legislation putting tremendous pressure on many businesses. 

On March 19, 2024, Michigan’s Senate passed a series of bills that would advance the potential for a research and development tax credit in Michigan for the first time since 2011.

Coined in 2006 by then Google CEO Eric Schmidt, “cloud computing” is a general term that encompasses any shared computer utility that a business and its employees have access to through any computing device at any time and from anywhere. In recent years, cloud computing has become an essential company resource vital to a company’s growth. For taxpayers, correctly calculating the tax treatment of cloud computing expenses for research and development activities has become increasingly important.

The U.S. House of Representatives passed HR 7024, The Tax Relief for American Families and Workers Act of 2024, on Wednesday, January 31, 2024.

Client Snapshot

Logo
  • Defense/Aerospace Manufacturing

    Missouri

  • Company Profile

    Manufacture Aerospace/Maritime Components

  • Project Type

    Retroactive Study

  • Project Objective

    Tax Credit Realization

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Defense/Aerospace Manufacturer

Client Profile
A company in Missouri manufactures aerospace and maritime components for the military. They have also expanded to a chemical processing plant to add further value for their clients. McGuire Sponsel was engaged to perform an R&D Tax Credit study for tax years 2018-2021 to maximize the credit amount for the company.

Process
Our R&D Tax Credit Services team utilized the company’s time tracking system to determine accurate percentages of qualified time, as well as including all applicable personnel. We performed detailed onsite fieldwork where we met with the client in their facility, interviewing various departments to get a better understanding of the company and their research and development process. Our process took about 3 months from start of engagement to sending a final report.

During the process, our team found that the formatting of the company’s time tracking made it difficult to analyze, but we were able to adjust and effectively determine an accurate percentage for qualified individuals.

Study Results
In 2018-2021, federal QREs totaled $7.7M resulting in a total effective credit amount of $498,647.

  • $7,712,935

    2018-2021 Total Federal QREs

  • $498,647

    2018-2021 Total Effective R&D Tax Credit Amount