R&D Tax Credit – Are you Missing Out?

When the owners of a plastic injection mold company were looking to put together a buy-sell agreement and also needed a business valuation to implement a succession plan, they called BPK&Z. Once the buy-sell agreement was negotiated, BPK&Z talked with the two remaining owners about beneficial changes, which could be made to help make their business more profitable. Impressed by their observations, the owners retained BPK&Z as their on-going accountants.

Gary Turnquist, CPA, wanted to learn more about their company and its inner workings so he could make the best recommendations for the company. After three on-site visits, it was clear to Gary that the R&D Tax Credit needed to be looked into further. He asked John Csargo, CPA, to analyze the possibility with him, and together they concluded that there was a great opportunity for the owners to secure a much larger tax credit than they had in the past.

Gary and John met with the owners to discuss what the cost of the R&D study and the fees associated with building a file. Then they showed the owners what they saw as the potential return. The owners agreed it was a good investment and something they wanted to pursue.

“In the first year, for their 2007 tax return, the owners each received a tax credit of $56,000 for a total of $112,000 compared to the $1,000 to $2,000 they had received in the past. They were extremely happy. Going forward, they should be able to receive $15,000 to $20,000 a piece each year. Their return more than paid for the investment it took to set up the R&D the first year,” said Turnquist.

Many companies don't think they qualify for the R&D Tax Credit, but the IRS has recently introduced the simplified method, which makes qualifying easier than in the past. Companies involved in manufacturing, engineering, production, quality assurance, information technology, and sales and marketing could all possibly qualify for a R&D Tax Credit. Usually an hour interview and tour of your company is enough to give a BPK&Z team member an idea if you would qualify.

To set up an appointment or find out further information on the R&D Tax Credit contact: Gary Turnquist, CPA, at or John Csargo, CPA, MBT, CFP® at . They can both be reached by phone at (763) 546-6211.

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