TaxOps Minimization

Unlock the financing potential of R&D credits
These dollar-for-dollar federal and state credits are available to taxpayers who perform qualified research, and can return 5 to 8 cents for every dollar spent in qualified expenses.

R&D Payroll Tax Offset
Companies with < $5 million in revenue and < 5 years of revenue can use the credit to offset payroll tax in the quarter after filing a tax return that includes research credit claims.

Increase net R&D credit return
We deliver fresh perspectives and proven strategies that:
• Qualify and quantify activities by associate per component and project
• Uncover additional expensing categories
• Streamline the interview, data and documentation process
• Increase validity of qualifications while keeping disruptions to a minimum
• Deliver audit-ready study on an indexed flash drive for easy record retrieval
• Integrate compliance framework and forward-looking tax saving strategy

R&D process
With an efficient, year-round process, we perform the R&D study on your timeline and deliver all reports, schedules and memos well before the tax return deadline. Our efforts extend to modifying your provision estimate.

Businesses with accumulated net operating losses (NOLs) and tax credits could find access to these tax benefits limited by IRC §382/383 without proper planning. §382/383 studies measure when a limitation arises, and the allowable amounts, related to business events that include ownership changes and funding activities.

Value of §382/383 Studies
Net Operating Loss and Tax Credit Planning studies support the amount of deferred tax assets from NOLs or credits in financial statements, tax returns, and transaction due diligence.

At one time or another, most companies are faced with having to work with the Internal Revenue Service and other state revenue agents to settle tax issues in dispute. We work with national and local tax authorities to develop an audit and workout plan for settling outstanding tax issues, minimizing operating disruptions and frustration often associated with audits, pre-filing agreements, and appeals cases.

The Internal Revenue Service requires taxpayers to capitalize overhead costs associated with inventory, which increases taxable income. There are several different methods to determine what to include in the calculation. Due to the complexity of the calculation, many taxpayers include costs that should be excluded or use less-than-optimal calculation methods, thus increasing the capitalization.

Value of Uniform Capitalization Study
Through a uniform capitalization study, costs are analyzed and the optimal calculation method is selected for capitalizing overhead costs associated with inventory and lower your tax obligations

Historically under §174, taxpayers were allowed to expense all research expenses or elect to capitalize these costs over five years. For tax years starting Jan. 1, 2022, all businesses—from multi-billion-dollar corporations to small business owners—have been required to capitalize §174 costs, including software development costs. These companies must capitalize all IRC §174 expenses, spreading the amortization of those expenses over either five (US costs) or 15 (foreign costs) years.

Among those impacted are businesses:

• Making use of §174 expense deductions
• Claiming R&D credits
• Preparing income tax provisions
• Making quarterly estimated tax payments

Section 59(e) provides an optional election to capitalize and ratably amortize §174(a) R&E expenditures over a 10-year period beginning with the taxable year the expenditure was made.

Each taxpayer must follow the law, both capitalizing and amortizing research expenses in alignment with their respective timing situation. Reach out to your TaxOps adviser for more guidance.