There are four basic requirements for research activities to qualify:
- Qualified research activities are defined as the development or improvement to a business component, which is defined as a product, process, technique, formula, invention or software.
- The research must be technological in nature. That is, the process of experimentation used to discover the information fundamentally relies upon the physical or biological sciences, engineering or computer science. Furthermore, companies may use existing technologies and may rely upon existing principles to satisfy this requirement.
- The research must be intended to eliminate uncertainty concerning the development or improvement of a business component. Uncertainty exists if the capability or method for developing the business component is unknown, or if the appropriate design of the business component is unknown.
- Elimination of the technical uncertainty must be accomplished through a process of experimentation, including systematic trial and error, modeling or simulation.
Documentation is the key to substantiating your R&E tax credit claim and choosing a service provider that has a dedicated group focused on this complex area of the tax code is essential. Our R&E Tax Credit Group specializes in assisting companies and their advisors with their claims. Our group of professionals consists of engineers, CPAs and tax specialists, prior business owners of manufacturing companies, and technical writers. Our streamlined processes help to provide the highest quality service with the least amount of interruption to your operation.
For more information or to find out if your business may qualify for this credit, please contact Adam Herman, CPA/ABV/CFF, CVA, ASA, CFE or Michael Devereux II, CPA.