Manufacturing Company Saves $143,000 with R&D Credits and Cost Segregation
Our manufacturing facility does custom metal fabrication and product development. When AE Tax Advisors mentioned R&D tax credits, I said the same thing most manufacturers say -- we are not doing research. They patiently explained that the IRS definition of qualified research activities is much broader than most people think.
Our process improvement work, material testing, prototype development, and tooling design all qualified. AE Tax documented everything with detailed technical memos and calculated credits for the current year and two prior years through amended returns.
They also performed a cost segregation study on our 40,000-square-foot facility. Industrial buildings have a tremendous amount of reclassifiable components -- cranes, compressed air systems, specialized electrical, reinforced flooring, dock levelers, and more. The accelerated depreciation was significant.
As a bonus, they identified Section 179D energy efficiency deductions for a lighting upgrade we had done two years earlier. My old CPA had no idea this deduction existed, and the retrofit qualified for a substantial per-square-foot deduction.
Combined savings: $143,000. That is the most thorough tax review I have ever experienced. The team spent two days at our facility documenting everything for the cost seg study and R&D analysis. They were professional, asked smart questions, and delivered results that far exceeded what I expected.
If you own a manufacturing business and your CPA has not discussed R&D credits with you, I strongly encourage you to contact AE Tax Advisors. The savings are real.