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R&D Tax Credits

Can You Claim Research and Development Tax Credit?

What Is the R&D Tax Credit?

Discover how your innovative business can benefit from the Research and Development (R&D) Tax Credit. Designed to foster innovation and growth, this federal incentive rewards companies for investing in the design, development, and improvement of processes, products, and services.

By engaging in qualified R&D activities in the U.S., companies can receive tax credits, providing a dollar-for-dollar reduction of income tax liabilities. Start-up companies can even leverage a portion of these credits to offset federal payroll tax liabilities. Learn how your business can save money and drive expansion through the R&D Tax Credit today.

How To Claim an R&D Tax Credit?

While the process to apply for, and ultimately, receive cashback from the R&D Tax Credit is complex, our Tax Credits & Incentives Advisory team has developed a systematic approach designed to maximize your R&D Tax Credit and gain a solid defense against IRS criticism. We can help you capture cash benefits that typically will greatly exceed the investment of this analysis.

Determining which activities qualify for the R&D Tax Credit begins by passing the Four-Part Test created by the IRS.

The Four-Part Test for Qualifying R&D Activities

Part 1: Business Component/Permitted Purpose Test

The activity must relate to a new or improved product, process, or design (business component) that is intended to improve:

  • Function
  • Performance
  • Reliability
  • Quality

Part 2: Technological in Nature

The activity performed must rely on the principles of:

  • Physical science
  • Computer science
  • Engineering
  • Biological science

Part 3: Elimination of Uncertainty

The activity must be intended to discover information to eliminate uncertainty related to:

  • Capability to improve product process or design
  • Method to improve product process or design
  • Appropriateness of design

Part 4: Process of Experimentation

Substantially, all the activities must relate to:

  • Identifying uncertainty regarding the development of the product, process or design
  • Utilizing a process to evaluate one or more alternatives to eliminate the uncertainty
  • Testing, implementing trial and error, or modeling to refine or discard alternatives

Your Ultimate R&D Tax Credit FAQ Guide

Get answers to frequently asked questions about R&D tax credit and maximize your company’s improvement-driven tax savings.

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Cherry Bekaert’s Technology Driven Process

Discover how our efficient R&D survey process, powered by our proprietary tool, simplifies the allocation of Qualified Research Expenses (QREs) across your organization. Here’s what our process entails:

Scoping the R&D Credit:

  • Gather pertinent information
  • Collect financial data electronically
  • Identify QREs
  • Conduct interviews with key personnel
  • Estimate federal and state research credits
  • Prepare a comprehensive work plan for the research credit study

Performing the R&D Credit Study:

  • Accumulate financial and cost accounting data
  • Organize documentation for qualified research activities
  • Interview technical subject matter experts
  • Analyze current and prior year expenses to support base amounts and credit-eligible QREs
  • Prepare methodology and interview memoranda demonstrating compliance with Section 41
  • Deliver IRS audit-ready documentation

Let Us Be Your Guide Forward

The process to apply for the R&D Tax Credit is complex. Cherry Bekaert’s R&D Tax Credit consultants have developed a systematic approach designed to maximize your R&D Tax Credit and gain a solid defense against IRS criticism.

Our R&D Tax Credit services can help you capture cash benefits that could greatly exceed the investment of this analysis.

Value-Added Benefits:

  • Complimentary analysis of federal and state R&D tax incentive benefits
  • IRS defense services
  • Consultation and analysis regarding credit utilization by a Company, partners and shareholders
  • Analysis of whether R&D Tax Credits can be used against federal and state payroll tax liabilities
  • Deliverables designed to address potential IRS inquiries
  • Proprietary technology tools to survey R&D activities
  • Identification of other tax credit benefits for alternative energy investments, hiring and capital investments

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Martin Karamon

Partner, Tax Credits & Incentives Advisory Leader

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Vivian Kohrs

Vivian Kohrs

Director, Tax Credits & Incentives Advisory

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Carolyn Smith Driscoll

Carolyn Smith Driscoll

Director, Tax Credits & Incentives Advisory

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