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Tax Credits & Incentives

With more than half of eligible tax credits going unclaimed during any given year, businesses are leaving money on the table.

Our Approach

Taking advantage of the available tax credits and incentives at federal, state and local levels creates an opportunity for businesses, and even individuals, to significantly lower their tax liability.

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R&D Tax Credits

Federal and state research and development (R&D) tax credits can be applied to a company’s efforts to design, develop or improve a product or process, and to the process of experimentation undertaken as part of those activities. Amounts paid for salaries, supplies, contract research and computer leasing can qualify for the R&D tax credit, and recent changes in government regulations mean more industries now are eligible.

Documenting R&D activities in a way that meets the stringent requirements of the IRS and state tax authorities isn’t easy. As a result, we find many firms don’t receive the R&D tax credit they deserve — or don’t qualify for an R&D tax credit at all.

Even if your company isn’t currently in the position to utilize the credit, R&D costs can be carried forward to offset tax on future profits, and the R&D tax credit can be claimed retroactively by filing amended returns for the past three years. Our R&D tax credit experts can work with your internal team to help you identify and effectively document qualified R&D activities. This close collaboration helps reduce your risk of not qualifying for this important tax credit.


Opportunity Zones

Akin to the combined tax benefit of a 401(k) and a Roth IRA, an investment in one of the country’s 8,700 designated opportunity zones has the potential to be one of the most significant tax-benefited investments in the history of the U.S. tax code.

There are two main tax incentives encouraging investment in qualified opportunity zones. The first incentive is a deferral of inclusion in gross income of certain gain to the extent that a taxpayer elects to invest a corresponding amount in a qualified opportunity fund (QOF). The second incentive allows the taxpayer to elect to exclude from gross income the post-acquisition gain on investments in the QOF held for at least 10 years.

Additionally, with respect to the deferral of inclusion in gross income of certain gain invested in a QOF, the tax code now permanently excludes a portion of such deferred gain if the corresponding investment in the QOF is held for five or seven years.

Therefore, this one-two combo of incentives is similar to both a 401(k) and Roth IRA, and in most cases, with a much shorter holding period.


Opportunity Zone State Issues

When choosing an investment in an opportunity zone or the various specific QOFs, state tax planning becomes very important. As not all states have conformed to some of the federal tax changes around opportunity zones, taxpayers may still incur a tax liability in their home state and potentially in other states if the QOF makes national investments. Armanino can provide the necessary expertise to assist you in QOF selection and/or formation, annual tax compliance and the eventual liquidation of your QOF investment.


Employee Wage-Based Tax Credits

In addition to R&D credits and opportunity zones, another often overlooked area for tax reduction is employee wage-based or payroll-based tax credits. From the Work Opportunity Tax Credit to the Federal Empowerment Zone Tax Credit and many other state-by-state credits, we can help your organization assess what’s available to you today and into the future.

Experts

Resources

California Governor Signs Budget Bill — Suspends NOLs and Puts Limitations on Busines ...

On June 29, 2020, California Governor Newsom signed a bill to increase revenue, but suspend NOLs and limit tax incentives.

Opportunity Zones 2020: Where We Are Now

The IRS's final regulations on opportunity zones are mostly good news for OZ investors, QOFs and QOZBs. Here's what the new rules mean for this “once-in-a-generation" wealth creating program.

Opportunity Zones Equal Significant Tax Benefits

Investing in a qualified opportunity zone allows taxpayers to reduce and delay taxes on profits from businesses, stocks and investment partnerships if the money is reinvested in one of the country's 8,700 designated dist ...

Take Another Look at the R&D Credit

Many businesses are missing out on potential tax savings from this now-permanent credit.

How Tax Reform Enhances the R&D Credit

The TCJA's changes to the corporate tax rate, AMT and amortization of expenses have made the R&D credit more valuable.
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Make sure you don’t miss any important 2018 tax deadlines. Be aware that some deadlines have been moved up or pushed back compared to previous years.

Election to Apply the Research Credit Against Payroll Taxes

If you are a qualified small business, subject to limits, you can elect to apply all or some of any research tax credits that you earn against your payroll taxes instead of your income tax.

Sooner Rather Than Later – Timing for Taking Your R&D Payroll Tax Credits

Recent legal advice issued by the IRS Associate Chief Counsel helps clarify some of the confusion around the new payroll tax credit for R&D for qualified small businesses.

California manufacturers and certain researchers and developers may qualify for partial exemption of sales and use tax on certain equipment purchases and leases.

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This summary of when various tax-related forms, payments and other actions are due will help you make sure you don’t miss any important 2017 tax deadlines.

PATH Act Makes R&D Credit Permanent

On December 18, President Obama signed into law the Protecting Americans from Tax Hikes (PATH) Act of 2015, extending many of the expired business and individual tax provisions, and most notably, making the temporary ...

2015 PATH Act Does More Than Extend Tax Breaks

On Dec. 18, the Senate passed the PATH Act. We provide a quick rundown of some of the key tax breaks that have been extended or made permanent for individuals and businesses.

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Now is the time for affected employers to begin assembling the necessary ACA information. This article details what information is required to complete Forms 1094 ...

Highway Funding Law Brings Important Tax Law Changes

The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 was signed into law on July 31; the 34th stopgap extension of transportation programs since 2009.

New Trade Law Hikes Penalties for Tax Reporting Errors

The Trade Preferences Extension Act of 2015 (TPEA) increases by as much as 150% the potential penalties for taxpayers that err in their ACA information reporting to the IRS or payees.

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The IRS recently released guidance on two major areas affecting businesses—the Work Opportunity Tax Credit (WOTC) and the tangible property regulations, and ...

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The recently released ACA transition relief period for small employers (those with fewer than 50 full-time equivalent employees) includes 2014 and the first six m ...

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The IRS and Treasury proposed regulations that provide a definition of software developed primarily for internal use and describe software not developed primarily ...

Businesses, Individuals Benefit from Latest Tax Relief Extender Law

On Dec. 16, the Senate passed the Tax Increase Prevention Act of 2014 (TIPA), a stopgap measure that retroactively extends certain tax relief provisions through Dec. 31, 2014.

FASB Issues Revenue Recognition Guidance for R&D Vendors

The Financial Accounting Standards Board (FASB) recently released Accounting Standards Update (ASU) 2010-17, Revenue Recognition — Milestone Method (Topic 605): Milestone Method of Revenue Recognition (a consensus ...