Many business owners are aware that the federal research and development (R&D) credit is based on what the government deems as qualified activities undertaken by a company each year. However, over the years, many opportunities to take advantage of the credits may have been passed over by business owners due to the complex rules around filing and extensions. But, there is good news on the horizon!
Last December, the R&D credit became permanent with the passing of the Protecting Americans from Tax Hikes (PATH) Act. As a result, the R&D credit has gained traction in the agribusiness industry this past year. BerganKDV has access to additional resources through our independent firm membership with BDO Alliance USA, one of the nation’s largest accounting firms.
Leveraging our relationship with BDO, a couple of our larger agribusiness clients are exploring the opportunity to claim the R&D credit in a number of areas that may also be applicable to your company.
Here is a list of the general types of activities that might qualify for the credit:
- Customized Formulation Development – Agronomists, nutritionists, food scientists and others who spend time performing customized blending services for clients in order to find the optimal formulation.
- Software Development – Personnel and contractors that spend time developing new customized software may qualify for the R&D tax credit. This could include software that helps with blend optimization or for improving internal functions like billing automation and optimization. Software developers who customize mathematical models based on agronomy data and grain scale interphase and dry fertilizer software developers and others who spend time designing controls and communication protocol between equipment hardware and their end-users may also qualify.
- Feed Mill Process Development – Personnel and contractors that spend time designing new feed mill capital equipment/processes, or new or improved production processes.
- Animal Growth & Development – Nutritionists, food scientists, veterinarians and others who spend time trying to increase the growth efficiency and health of livestock.
- Environmental – Engineers, contractors and others who spend time scoping and designing new technologies to meet air pollution regulations and scientists, environmental engineers and salesmen who spend time soil sampling as part of an experimental process.
- Grain Bin or Fertilizer Terminal Design and Expansion – Engineers, contractors and others who spend time scoping and designing new or upgraded dry fertilizer terminal designs or grain bin designs. This includes site analysis, capital design, validation testing at the terminal, and confirming a grain bin can be supported appropriately by the land and meets government regulations.
Please don’t hesitate to reach out if we can help you pursue applying for these credits to take advantage of tax savings for your organization.