The Research and Development (“R&D”) Tax Credit (or “R&D Credit”) is an often an overlooked tax incentive due to many misconceptions regarding its applicability to those creating or introducing a new product or technology to the marketplace.

The Technology Business Tax Certificate Transfer Program enables qualified, unprofitable, NJ-based technology or biotechnology companies with fewer than 225 U.S. employees (including parent company and all subsidiaries) to sell a percentage of their net operating losses (NOL) and research and development (R&D) tax credits to unrelated, profitable corporations.

Among the less taxpayer-friendly provisions in the 2017 tax law is a requirement to amortize research and development expenses over a period of at least five years effective for tax years beginning after Dec. 31, 2021. Currently, taxpayers can elect to immediately expense such costs. Yair Holtzman and Gleb Gorkhover of Anchin explain why eliminating the immediate expensing option discourages taxpayers from keeping R&D activities in the U.S.

The research and development tax credit can help finance emerging technologies. Yair Holtzman and Joseph Lally list multiple technologies that could be eligible for the credit and outline requirements to claim the credit.

The Foreign-Derived Intangible Income (FDII) income deduction is not the simplest of calculations. Gwayne Lai, Amanda Scott, and Yair Holtzman of Anchin show how some taxpayers can use existing R&D data to get a head start.

Taxpayers within the Architecture, Engineering and Construction (AEC) industry received a big win from the U.S. Tax Court this past December. The Tax Court’s decision reaffirmed that AEC industry companies contracted by developers or other clients are indeed eligible to claim R&D tax credits for research activities they perform. This has long been a contentious issue between the IRS and AEC Industry taxpayers. Populous Holdings, an architectural design services company, had claimed R&D tax credits on its 2010 and 2011 tax returns totaling nearly $300,000. The IRS disallowed these claims, arguing that the research activities were funded by Populous clients who contracted with the company for its services.    

For many companies, catalyzing successful innovation is already critical to long-term strategy and success. Companies recognize the importance of tax credits and incentives as critical weapons in remaining competitive and harnessing innovation. This R&D tax credit may be increasingly attractive for companies that are redesigning their business processes and/or product innovation in the face of the pandemic.

Manufacturers repurposing production and research to support the relief effort may qualify.

The R&D tax credit can be a powerful incentive, often providing a hidden source of cash from prior years’ expenses while also serving to significantly reduce current and future years’ federal and state tax liabilities. The R&D tax credit is also a tool for refueling a company’s R&D efforts. Planning ahead by creating an infrastructure that identifies qualifying research activities and collects contemporaneous documentation is essential to reducing future tax liabilities and synthesizing an R&D tax credit that will be sustainable on audit examination. There has been a new development related to this credit. 

Yair Holtzman and Sharlene Sylvia share insights about how companies can take advantage of the alternative simplified credit with NJBiz.

Many Israeli companies with connections to the United States have benefited extensively from the research and development tax credit, which has recently become significantly more accessible.

As the Research & Development (“R&D”) Tax Credits Group Practice Leader, I am responsible for the leadership, strategic focus and business performance of the group. In this role, I oversee the R&D group’s growth, vision, diversification and development.

The federal research and development (R&D) tax credit under Internal Revenue Code (IRC) section 41 was first introduced by Congress in 1981. The purpose of the credit is to incentivize U.S. companies to continue and increase spending on research and development within the U.S.  The R&D tax credit is available to businesses that uncover new, improved, or technologically advanced products, processes, principles, methodologies or materials.  In addition to “revolutionary” activities, in some cases the credit may be available if a company has performed “evolutionary” activities such as investing time, money, and resources toward improving its products and processes.

Architecture, engineering, and construction (“AEC”) firms frequently invest substantial resources to advance and improve building designs and processes. When contractors, architecture and engineering professionals develop and design new and innovative techniques, their activities may qualify for the R&D tax credit. As a result of unique project aspects and ever-changing structure and energy codes, many projects that appear similar on the surface are, in fact, at least partially new or improved with respect to function or performance.

On December 22nd, President Trump signed the Tax Cuts and Jobs Act of 2017 (“TCJA”) into law, setting the stage for the most sweeping update to the U.S. tax code since 1986 tax reform enacted under President Reagan.  The centerpiece of the TCJA, is a permanent reduction in the corporate tax rate from approximately 35% to 21%. Thankfully, as expected, the final law has preserved the research and development (“R&D”) tax credit, which was made permanent in the Protecting Americans against Tax Hikes (“PATH”) Act of 2015. 

Yair Holtzman, Leader of Anchin's Research and Development Tax Credits Group, explains how the credit works and shares his findings on the impact of the PATH Act.

The Large Business and International (LB&I) division of the IRS recently released guidance that will allow taxpayers to take advantage of a new safe harbor under which an adjusted amount of their ASC 730 R&D costs can be deemed qualified research expenses (QRE) for the purpose of claiming the Section 41 research tax credit. 

The New York State Department of Taxation and Finance has expanded the applicability of the Alcoholic Beverage Production tax credit (formerly known as the Beer Production Credit).  For tax years beginning after December 31, 2015, the credit is now available to registered distributors that produce beer, cider, wine and liquor.

Recently, the IRS issued interim guidance on how eligible small businesses can benefit from a new provision that enables them to apply their Section 41, Research and Development tax credit against their payroll tax liability instead of their income tax liability, allowing qualified companies to start using the credits before becoming profitable. 

New Jersey has amended and expanded the rules for claiming the Angel Investor Tax Credit. The Angel Investor Tax Credit provides for a tax credit equal to ten percent (10%) of the qualified investment made by a taxpayer in a New Jersey emerging technology business.

On October 3rd, 2016, the Treasury and IRS released final regulations regarding Internal Use Software (“IUS”) expenditures as related to the Section 41 Research & Development (“R&D”) tax credit.

Yair Holtzman, Practice Leader of Anchin's Research and Development Tax Credits Group, Life Sciences Industry Group and Chemicals and Energy Industry Group, shares his thoughts on the proposed "patent box" regime.

Designed to protect jobs in the United States manufacturing and related sectors, Section 199, also known as the Domestic Production Activities Deduction ("DPAD"), allows a deduction equal to 9% of the lesser of a taxpayer’s Qualified Production Activities Income ("QPAI") or its taxable income.

This past February, the IRS released its annual "Dirty Dozen" list of warning alerts for 2016 filing season. The Dirty Dozen includes a variety of common scams taxpayers may encounter at any time during the year.

On December 18, 2015, President Obama signed into law The Protecting Americans from Tax Hikes Act (PATH) of 2015.

On December 18, 2015, President Obama signed into law The Protecting Americans from Tax Hikes Act (PATH) of 2015.

Christmas came early this year for finance chiefs hoping a permanent research and development tax credit would get President Barack Obama’s signature.

On December 18, 2015, President Obama signed into law The Protecting Americans from Tax Hikes Act (PATH) of 2015.

The Biotechnology Tax Credit allows qualified emerging technology companies (QETCs) specializing in biotechnology to claim a tax credit against the General Corporation Tax and Unincorporated Business Tax for amounts paid or incurred for certain expenses in New York City.

For companies in net loss positions, the R&D credit can be carried back one year and carried forward for 20 years until it can be used. In addition, similar credits and other incentives are offered by 38 states, six of which offer refundable credits to attract new jobs and industries to the region.

The Agricultural Chemicals Security Credit was applicable to eligible expenditures incurred after May 22, 2008 and before January 1, 2013.

On January 29, 2015, the United States Court of Appeals for the Eleventh Circuit affirmed a federal district court’s decision in Geosyntec Consultants, Inc. v. United States, No. 14-11107, disallowing the R&D tax credit for research expenditures linked to capped contracts.

On January 16, the Treasury and IRS released proposed regulations (REG-153656-03) regarding internal use software ("IUS") expenditures as related to the Section 41 Research & Development ("R&D") tax credit. The proposed regulations contain several important changes related to claiming the R&D tax credit for IUS expenditures.

Anchin, Block & Anchin LLP is pleased to announce the addition of Tamir Dardashtian (Principal), Yair Holtzman (Partner) and Christopher Noble (Partner) to the partnership, as of October 1, 2014. With these additions, Anchin has a roster of 54 partners and principals who provide creative, proactive advisory services to clients representing all of the major industries represented in the tri-state area.

The R&D tax credit can lower a taxpayer’s effective tax rate and potentially generate additional cash flow to fund future development activities.

Section 41 research and development (R&D) tax credits are available to Architectural, Engineering, and Construction (AEC) industry companies that design and develop new or improved products, processes, methods, techniques, or materials. In addition to “revolutionary” activities, research credits may also be available to companies performing “evolutionary” activities or incremental improvements to their own products and production processes.

The Research and Development tax credit is a U.S. business incentive offered to companies that experiment with emerging technologies, including cybersecurity solutions. The article offers guidance related to this section of the tax code and highlights the types of core business activities that can qualify for this generous credit.

The purpose of this article is to help private military defense contractors obtain a better understanding of the federal R&D tax credit and how it may help enable military defense innovations. This article also explores recent defense innovations for land, air, sea, cyberspace, and outer space threats and how the federal R&D tax credit incentive offered may be able to save a business money when developing these solutions.

It is worthwhile for any US based business in the chemical industry that is attempting to innovate to consult with an R&D tax credit professional if they are not already claiming this credit. Even if a company is already claiming this credit it is worth examining to ensure this benefit is truly optimized.

This article discusses the definition, workings, recent history / developments, and calculation methodologies for the R&D tax credit. It then offers specific examples of qualifying…

Yair Holtzman, Gleb Gorkhover and Michael Ganz of Anchin Block & Anchin examine common myths that deter companies from claiming benefits of the research and…

Yair Holtzman and Ronald Kalungi of Anchin Block & Anchin look at U.K. and U.S. tax provisions geared to stimulate R&D and technological innovation, including…

Yair Holtzman of Anchin, Block & Anchin examines how expenses to improve packaging design can qualify for research and development tax credits. As new materials,…

Yair Holtzman of Anchin, Block & Anchin writes that more taxpayers are eligible to claim R&D credits with enactment of the PATH Act, and the…

Yair Holtzman, Gleb Gorkhover, Michael Ganz and Matthew Bechtold of Anchin, Block & Anchin offer a state-by-state examination of the various state R&D credits and…

The financial services industry is an essential component of the U.S. economy that provides liquidity to companies and individuals, is responsible for safeguarding and investing…

Yair Holtzman and Matthew Bechtold of Anchin, Block & Anchin explain the costs that are eligible for-and computations required to claim-research and development tax credits,…

Does your company develop new medical products, pharmaceuticals, or innovative production techniques in the United States? Does your company create software for the medical industry…

Innovation is a key driver in helping food and beverage companies deliver on strategic goals by getting the right products to market with speed and…

The United States is the global leader in medtech innovation, but can it continue to maintain that position? As the medical device industry enters 2015, the…

Introduction While large multinational architectural, engineering and construction firms are well aware of the benefits of the Research and Development (R&D) tax credit and avail themselves…

Abstract Food and beverage innovation is a key driver in helping companies in the industry deliver on strategic goals by getting the right products to market…

Healthcare reform, regulation, and R&D hurdles must be overcome to gain access to the big opportunities for the medtech industry. Today, the United States is the…

While most giant corporations crashed during the worst economic climate since the Great Depression, the biomedical devices industry grew, invested, and prospered. The Great Recession…

Introduction The 110th Congress passed the Food, Conservation, and Energy Act of 2008 (Pub. L. No. 110-246), popularly known as the "Farm Bill," in May 2008 over…

Abstract Purpose – The purpose of this paper is fourfold: to provide an overview of the alternative simplified credit (ASC) and a basic understanding of how…

Introduction Organizations employ a number of formulas to improve their business processes. These actions typically involve searching for internal cost-savings opportunities, developing departmental strategic relevance and…

Introduction The ability to effectively innovate and develop new products is a vital core competency that any company must possess if it is going to be…