Professional Documents
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Presented by
Michael Silvio, CPA Managing Director, CBIZ MHM, LLC.
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As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal or state tax advice contained in this presentation, including charts or graphs, etc., is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service or state tax authorities. Certain portions of the presentation materials have been taken from various articles and information prepared by other sources. The information in this presentation contains trade secrets and confidential and proprietary information belonging to CBIZ and Mayer Hoffman McCann P.C or others. As a result, the information in this presentation is not to be disclosed, duplicated or disseminated in any way or any purpose other than your evaluation.
Agenda
Research and Development Tax Credits Domestic Production Activities Deduction Energy Efficient Building Deduction Summary/Key Takeaways Questions
The Federal Research Credit : Technical Aspects Governed by IRC Sections 41 and 174
Federal credit is 20% of qualified costs over baseline for activities performed with U.S. Various states have various credit provision for R & D performed within the state and are changing on a continuous basis. Methods of calculation: Traditional Method Alternative Simplified Credit (Fed only) Various State Methods Reduced credit can be elected (IRC 280C); TD 9539 Fed: Can be carried back 1 year and carried forward 20 years; for 2010, carry back is 5 years as ESB credit Carry back and carry forward provision vary by state
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New or Improved Business Component Test Process of Experimentation Test Technological in Nature Test
Research and Development Activities Design/Engineering Innovation/Experimentation Prototyping and Testing Foreign Outsourcing Design Fabrication/Prototyping Domestic Outsourcing Design Fabrication/Prototyping
Furniture Healthcare products High Tech Life Science Lubricants Medical Devices Paper Products Software Developers
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The business must be at risk on its investment in the research and The business must retain substantial rights in the results of the research
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Attempt to identify the largest projects that individual cost centers work on. Try to support this determination with work plans, payroll records, etc. Reliance on the recollection of a department head should be your last resort. For documentation, use material originally prepared for non-tax reasons, if you can. Engineers are often pack rats. You might be surprised at the type of details that they retain.
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Contemporaneous Documentation
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The majority of these decisions were victories for the taxpayer Some of the areas that these cases provided guidance included: Level of documentation Internal Use Software Tests Supplies expense and depreciable items Discovery Test
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Phase-In of Deduction Rate Taxable Deduction year Rate 2005 2006 2007 2008 2009 2010 and later 3% 3% 6% 6% 6% 9%
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Thank you!
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