Raising the Roof with R&D Tax Credits

R&D TAX INCENTIVES FOR THE CONSTRUCTION INDUSTRY

 

Construction firms, now more than ever, may qualify for federal and state R&D tax credits equal to up to 15 percent or more of qualified spending.

 

OPPORTUNITY FOR CASH AND OTHER BENEFITS

Recent judicial and administrative developments have made it easier for construction companies to claim sustainable R&D tax credits. According to these developments, spending to design and construct new buildings or components, and sometimes even simply to improve or integrate existing ones, can qualify. And construction companies are taking advantage of these developments, using these dollar-for-dollar offsets against regular income tax liability to acquire more people and new technologies to help them grow, increase their cash flow and reduce their effective tax rate. And if you’re not paying taxes now, you can still benefit from R&D credits: many states will pay you the value of your credit or allow you to sell or transfer them for cash; and state and federal credits may be carried back to earlier – and forward to later – tax years, when they could be used to offset your tax liability.

 

IS YOUR COMPANY ELIGIBLE? QUALIFIED ACTIVITIES –EXAMPLES

Qualified activities may begin as early as the preliminary bid-and-proposal stage, when the design and technical specifications are developed, and continue even through commissioning or plant startup, when a design is tested for performance. If you’re financing activities to try to develop or improve any of the following, you may be eligible for R&D tax credits:

  • Energy efficiency
  • LEED qualification
  • Structural systems
  • Construction equipment
  • Mechanical systems
  • Building materials and their combinations and uses
  • Electrical and lighting systems
  • Integration and constructability of building components
  • Water systems
  • Sanitary systems, including waste and wastewater treatment and disposal
  • Plant performance or capacity
  • Reclamation and remediation techniques
  • Process design
  • Structural boring techniques to allow construction in sensitive conditions
  • Pilot plants
  • Temporary structures used in the construction process
  • Construction techniques
  • Low-carbon technologies
  • Flashing details
  • Environmentally sustainable solutions

In addition, if you’re at risk for the financing attempts to develop or improve construction and construction-related components like those above by any of the following, you also are likely to be performing qualified activities:

  • Project architects
  • Engineers
  • Design services consultants
  • Electrical designers
  • Mechanical designers
  • HVAC fabricators
  • Lean and  Kaizen specialists
  • Material scientists

Importantly, these efforts do not have to succeed to qualify, nor do they need to be aimed at revolutionary enhancements. Attempting to develop incremental and evolutionary improvements in process or techniques can qualify your company for the credits as well. As long as your company is at economic risk for the development activities, they are likely to qualify.

 

WE CAN HELP: COMPLIMENTARY R&D REVIEW

Our construction industry tax and accounting professionals can review your company’s investments to determine whether they qualify and, if they do, how most efficiently and effectively they can be responsibly claimed and supported. This includes determining – based on your books and records, customer contracts, projects, and accounting and documentation systems – the optimal way to identify and document your qualified costs and activities, with minimal interruption to your operations. For more information, please contact Jimmy Schulz, CPA, CVA, MT at 402.423.4343.

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