When you think of R&D tax credits, breweries may not be the first thing that comes to mind. But dive into this case study to learn how Source Advisors uncovered a goldmine of tax benefits for a flourishing craft brewery engaged in unique R&D activities.
Established in 1995, this $70 million brewing company produces over 260,000 barrels of beer annually and has a presence in over 40 U.S. states and Washington D.C. The company has expanded its offerings to include a restaurant and an Inn, allowing customers to immerse themselves in the entire brewery experience.
The line between everyday brewing and R&D can often be blurred. For this brewery, their R&D activities were primarily focused on the creation of new brews, specifically, gluten-free beers that stand out for their unique flavor profiles. The challenges involved extensive experimentation and testing of new formulations and brewing processes.
In this case, the brewery’s R&D qualifications were unique but significant. They were engaged in crafting new gluten-free brews that went beyond the generic white lagers often available for gluten-free consumers. Their R&D activities involved thorough experimentation, ingredient selection, testing of new formulations, and intricate brewing processes aimed at producing distinctive flavors and aromas. Each of these actions contributed to the innovation of new products and satisfied the requirements for R&D tax credits.
Source Advisors stepped in following a recommendation from the firm’s audit partner. A feasibility analysis was first conducted to give an estimate of the potential R&D tax credit benefits.
We began by conducting a deep dive into the brewery's innovative processes, focusing particularly on their endeavors to create unique gluten-free brews. We evaluated the research, the experimentation involved, the range of ingredients tested, and the new brewing methodologies employed.
Our team reviewed financial records, including but not limited to, costs related to labor, supplies, ingredients, and overheads. We then calculated the potential tax credits that the brewery could claim based on these expenditures, ensuring they wouldn't miss out on any benefits.
The identified R&D activities were cross-verified against federal and state tax laws to ensure they met the necessary legal criteria for claiming R&D tax credits. This not only included the qualifications of the activities themselves but also reviewed the supporting documentation and justifications to ensure they were compliant and audit-proof.
Don’t miss out on the valuable tax credits that could boost your businesses growth.
Contact Source Advisors today to explore how we can unlock tax advantages for your food or beverage company.