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You don’t have to be developing aerospace technology or a new software developer to take advantage of the Research and Development Tax Credit (R&D).
A common misconception is that the R&D Tax Credit only applies to traditional manufacturers involved in new product development or high tech businesses. While these type industry segments certainly qualify, so do the following activities:
• Process improvements and development
• Improvements in function
• Reliability and quality to existing products
• Research and specification design, whether or not successful in leading to new products
• Developing and/or improving new products, processes, formulas, software, techniques
• Creating more reliable products, processes, formulas, software, techniques
• Developing prototypes or models, including computer generated models
• Designing dies, molds, tools and jigs
• Applying for patents
• Testing new concepts, new technology, or sourcing for new raw materials
• Improving existing or building new facilities
• Employing consultants/contractors to perform these activities
Help your clients who perform any of the above activities significantly increase their cash flow by ensuring they take full advantage of the R&D Tax Credit.
Performing the R&D Tax Credit and initiating the recovery can be very complex and requires specialized knowledge and expertise. SourceCorp’s specialization enables us to maximize the full potential of the credit through our full comprehension of the federal and selected states R&D Tax Credits rules, criteria, code and regulations.
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Examples of R&D Tax Benefits
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| Industry Type |
Gross Sales |
Tax Benefit |
| Plastic: Blow Molder |
$49,000,000 |
$283,000 |
| Metal Fabrication |
$42,000,000 |
$704,000 |
| Plastic Consumer Products |
$20,000,000 |
$184,000 |
| Equipment Mfg |
$24,000,000 |
$356,000 |
| Instrument Mfg |
$8,000,000 |
$156,000 |
| Consumer Products Mfg |
$16,000,000 |
$136,000 |
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A company may qualify when one or more of the following activities are true:
• Fights to survive international and domestic competition
• Invests time, money or resources to advance or improve their products or processes
• Manufactures products
• Maintains a staff of technical personnel such as engineers, designers, labs, and chemists
• Invests in continuous improvement activities
• Implements cost reduction initiatives
• Attempts to use new materials
• Adding new equipment
• Develops prototypes, jigs, fixtures and molds
• Automates or streamlines internal processes
• Develops new technologies
• Performs testing functions
• Develops, implements or upgrades systems or software
• Develops proprietary software applications for resale
• Obtains patents
• Spends money on outside consultants to do any of these things
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Industries That Can Benefit From R&D Tax Credits
• Food Service Industry
• Consumer Products
• Chemical and Pharmaceutical Industries
• Steel Processing (Rolled)
• Aluminum Processing (Flat/Rolled)
• Iron/Aluminum/Zinc Die Casting
• Packaging (Corrugated, Plastic, Film)
• Powdered Metals
• Primary Metal Bending/Cutting Industries
• Automotive Related
• Plastic Injection Molding
• Metal Stamping
• Custom Machine Building
• Furniture
• Tool and Die
• Software/Software Developers
• Winery
• Service Industries—Financial Institutions
• Professional, scientific, and technical services: architectural, engineering, computer systems design, scientific R&D services
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Established in 1983, SourceCorp is the largest specialty firm of its kind in the United States and is owned by major private equity firm Apollo Management Group. The company specializes in a number of professional tax services that help businesses minimize their taxable income under the rules and regulations of the Internal Revenue Code (IRC). Over the years, the company has grown rapidly through its expanded service offerings including the LIFO inventory method, Cost Segregation, and Research & Development Tax Credit services.
Today we provide services to thousands of clients through our CPA partnerships ranging in size from privately held companies to Fortune 500 companies across all fifty states in industry verticals ranging from automotive to retail to manufacturing.
• Providing specialized tax services to CPAs since 1983
• Engineering-based studies
• Maximized and quantified benefit
• Fixed-fee billing
• Free initial estimates
• $1M/$2M general commercial liability insurance with best-rated insurance firms
• Complementary audit support service if needed
• We have successfully implemented process controls and data security measures that meet the following standards: Sarbanes-Oxley Act of 2002, Gramm-Leach-Bliley Act of 1999, Health Insurance Portability and Accountability Act of 1996 (HIPPA)
• Consistently defended work before the IRS
• Non-CPA firm
• Experienced. Reliable. Trusted
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SourceCorp offers complimentary, no obligation analysis during the Pre-Engagement phase. During this initial assessment, our goal is to determine if there are any activities conducted by your company that qualify as research and development as defined by the Internal Revenue Code, turning your tax liabilities into assets, providing increased cash flow, permanent tax savings, and a method to secure the credit in future years.
After we have determined that certain activities do qualify, we will provide a realistic tax credit estimate based on high-level information provided by your company.
Using the R&D Tax Credit can result in “found money” for businesses, allowing investment in further research and development or other business growth activities. SourceCorp can help you capture your tax credit, and your CPA can help you decide what to do with it.
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