Mechanical and industrial engineering is an industry that constantly evolves through innovation. Renovating complex systems like those in pharmaceutical manufacturing plants often requires significant R&D efforts. Although often overlooked, such activities can qualify for R&D tax credits, but many firms struggle to identify what counts and how to claim these credits effectively.
A leading player with a $68 million valuation, this mechanical and industrial engineering firm was engaged to renovate two buildings in a pharmaceutical manufacturing plant. The project entailed the design and installation of new equipment, process piping, and utilities piping systems.
The firm faced intricate R&D challenges while renovating the pharmaceutical manufacturing plant. They needed to design new piping systems that integrated with existing ones without affecting flow rates. Given the complex engineering involved and the difficulty in determining what could qualify for R&D tax credits, they sought out professional guidance.
In this project, R&D was evident in the design of new piping systems, the incorporation of existing pipes, and the need to maintain optimal flow rates. Activities included evaluating multiple alternatives for pipes, utilizing computer-aided design software, and developing various system layout options. These activities qualified for R&D tax credits as they involved uncertainties that were systematically resolved through a cycle of design, testing, and analysis.
Upon referral from their CPA, the firm chose Source Advisors to explore the possibility of R&D tax credits for the company.
Our team initiated the engagement with an in-depth review of the firm’s projects and processes. We interviewed key project stakeholders, reviewed documentation, and applied our tax code expertise to map out qualifying R&D activities.
Utilizing our proprietary financial modeling tools, we estimated the total tax credits the firm could claim. This informed the firm's financial planning, enabling them to allocate resources more efficiently.
We documented all the identified qualifying activities and related expenses, aligning them with the requirements under section 41 of the IRC. Additionally, our team prepared all the necessary submission forms, schedules, and supporting documentation to ensure a smooth claim process.
Source Advisors dives deep into a company’s structure and research activities to maximize both federal and state R&D tax credits.
Contact Source Advisors to turn your R&D investments into financial advantages.