Discover how our R&D tax team can help you make the most of qualifying activities. he research and development (R&D) tax credit provides companies and their owners a dollar-for-dollar reduction in their tax liability by providing credits that lower their current year effective tax rate. Our experienced professionals understand the credit and the court cases that have provided additional guidance for its use. We work closely with you to assess your activities and ensure you are getting the most out of your R&D tax credit claim.

1. Annual Revenue: $25 million
Industry: Manufacturing/Cosmetics
Ownership: Privately-owned C corp
Number of Employees: 50
Location: Southern California
Client Profile
Issue
A private label manufacturer serving cosmetic companies also develops products
and formulations for its own product line. The company had built up a fairly large net
operating loss carryforward before turning profitable. As the company was quickly
depleting its NOLs, its tax preparation team sought to identify applicable tax credits and
incentives to minimize its tax burden.
Solution
Our team reviewed tax returns, financial data, and performed interviews of company
employees in a variety of departments, including production, compounding, sales,
engineering, and management. We identified qualifying activities in product development
and new and improved manufacturing process development efforts. We were also able to
go back into the loss years and identify qualifying activities to help the company generate
research and development tax credits that could be used to immediately reduce the
estimated tax payments the company would be making for the upcoming tax year, thus
immediately improving cash flow.
Outcome
The R&D tax credit study generated more than $1.1 million in total research and
development credits with an expected $125k-$150k in credits to be generated yearly
on a go-forward basis. The company was then able to take the immediate cash savings
and use it to fund further growth. Additionally, the credit study identified areas for
documentation improvement to help enhance credit positions and further maximize
future research credit claims.
Research & Development Tax Credit Case Study
www.cbiz.com/rd
R&D Study Yields More than $1 Million
in Tax Credits for Cosmetics Manufacturer
Identifying the
Credits You Deserve
Discover how our R&D tax team
can help you make the most of
qualifying activities.
The research and development
(R&D) tax credit provides
companies and their owners a
dollar-for-dollar reduction in their
tax liability by providing credits
that lower their current year
effective tax rate. Our experienced
professionals understand the credit
and the court cases that have
provided additional guidance for
its use. We work closely with you to
assess your activities and ensure
you are getting the most out of your
R&D tax credit claim.
© Copyright 2016. CBIZ, Inc. NYSE Listed: CBZ. All rights reserved.
For more information about R&D
tax credits, please contact Raj
Rajan. Raj can be reached at
949.727.1327 or rrajan@cbiz.com.