The Client
An industry leader in the manufacture of printed circuit boards for the appliance and electronics industries. They are headquartered in Michigan, with annual sales over $30 million and a workforce of over 90. By combining highly-skilled value-added board engineering for customers’ designs, prototyping, innovative manufacturing engineering and stencil/tooling design, they have achieved a competitive edge over others in their industry.
The Opportunity
RnD Consulting was asked by management to assist them in identifying a potential source of additional cash flow by evaluating their R&D tax credit position. Through a detailed analysis of their design/development of new and prototype boards, research of alternative components and the design of manufacturing processes and stencils and test fixtures, we successfully identified a significant number of activities and costs qualified for the R&D credit.
The Results
The client claimed their R&D credits and cash flow was enhanced by $660,000. Provided the R&D activities, costs and revenue continue at its present trend, the client should expect approximately $220,000 in annual federal tax savings in addition to annual state tax savings from state R&D credits.
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Printed Circuit Board Manufacturer
The RnD Consulting Approach:
The RnD Consulting, Inc. research and development consultants, specializing in the application of federal and state research and development tax credit laws, identified qualifying activities and costs. RnD engineering and tax consultants assisted the client in developing a credit methodology by providing the following services:
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Gathered information reviewed from tax returns and financials. Interviewed client personnel. Participated in site visits. Identified areas where expenses potentially qualified for research and development tax credits. Prepared detailed R&D activity questionnaires.
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Identified qualifying R&D expenditures and fixed base percentage. Projected expected R&D benefit for each year of the study.
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Identified and documented R&D issues and activities, process of experimentation and nexus between activities, costs, project files and personnel. Documented qualifying activity narrative and contemporaneous documentation. Applied recent case law to maximize potential benefit. Delivered file to client to support historical R&D credit methodology as well as template for future use.