The Architecture and Engineering (A&E) and straight engineering space have been long-time R&D tax credit-generating industries. There is technical uncertainty indicative of research activity in all of the engineering trades especially with regard to civil, structural, bridge, roadway, and building design and development. Each design is highly complex and rarely “cookie-cutter” for both new and existing structures. Design reviews, development of new processes, experimentation with materials, as well as evaluation of alternatives are often qualified activities.
Qualified activities are generally performed by estimators, engineers, project managers and technicians. Estimators perform bid and proposals. Many technical aspects of a job are identified at this stage. Estimators are often engineers, who are highly trained and experienced. Bids are based on drawings that estimators closely examine and analyze against information gathered through research. Equipment, material, and labor cost estimations are critical due to numerous unknowns. These individuals develop initial phase hypothetical performance specifications and must have the experience and skill level to anticipate these requirements while considering cost constraints successfully. Engineers often perform surveys to establish reference points, grades, and elevations.
Further activities may include soil testing for structural and foundation alternatives, new building materials testing, and risk analysis and the use of design software to develop new systems. Project managers spend time in the field, identifying issues and coordinating resolutions through alternative methods and techniques including land, grade, and soil changes. Technicians are responsible for collaborating with various engineers and project managers and their activities include soil analysis, software design and modeling, and drafting construction contract design documents.
In addition to internal labor, qualified research expenses (QREs) often include the costs associated with hiring outside consultants to perform these activities. Often, engineering firms underestimate the amount of R&D expenses and related R&D tax credit they deserve. Activities that can qualify for the credit are much broader in nature and scope than what may traditionally be thought of as qualified research and development.
This firm engages in numerous R&D initiatives every year. The total Federal Credits in their current year is $275,000.
This structural engineering firm employs the most advanced engineering techniques and processes.
Their expertise is in performing intense studies and analyses of structural components utilizing technologies such as radar, lasers, acoustics, pulse velocity or impact, fiber optics, x-ray, ultrasonics, and a variety of monitors for cracks, tilts, winds and environments for extensometers and large scale movements.
In addition, the firm is increasingly embracing concepts of sustainability and “green” construction techniques and processes.
The R&D tax credit can help a wide variety of businesses offset and reduce their income tax liability, in addition to providing many other benefits. Our team of experienced CPAs, attorneys, engineers, and technology experts helps companies save money and create cash flow with R&D tax credits that can then help drive overall growth.