Tax Credits Group Presents:

Research Tax Credit:The Basics

Michael A. Krajcer, JD, CPATax Credits Group, LLCOffice: (440) 331-0714Mobile: (216) 308-1564

2

Benefit:◦ Federal Income Tax credit equal to 14% of the

R&D expenditures that exceed a base amount.◦ State Credit – depends which state the activity

takes place in. Ohio – credit equals 7% of the qualifying

expenditures that exceed a base amount Applied against the CAT tax

Research Tax Credit

3

Qualifying Activity – Research and development intended to create a new or improved:• Product• Process• Computer Software• Invention• Technique• Formula

Qualifying Costs:• Wages• Supplies• Contract Research (at 65%)

Research Tax Credit

4

Requirements:• Document the project met the “Four-part Test”:1) R&D was for a Permitted Purpose2) Developmental Uncertainty existed at the outset of the

project3) The R&D utilized a Process of Experimentation4) The experimentation relied on Technical Information

Research Tax Credit