Research and Development Tax Credit: Foundries

By February 22, 2018R&D Tax Credits

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Companies within the foundry industry aren’t aware that most of their daily activities can be claimed under the Research and Development (R&D) Tax Credit. This strategic financial planning tool will allow foundries to reinvest the credit obtained into new R&D efforts. Any type of investments made in wages, supplies and contract research for “qualified services” purposes can be claimed under this tax incentive.

Additionally, it is important for foundry owners to acknowledge that qualifying research activities (QRAs) can occur in the plant or shop floor area. Companies don’t need a laboratory or specific R&D department to conduct QRAs as defined by the IRS. For an activity to qualify as a QRA, it has to fulfill the “IRS Four-Part Test”. This test has four requisites: new or improved business component, technological in nature, elimination of uncertainty and a process of experimentation.

The following foundry activities are eligible to claim the Research and Development Tax Credit:

  • Designing and developing new foundry processes
  • Developing and testing new environmental friendly controls.
  • Improving molding line, welding, heat treatment, and coating processes.
  • Designing, developing and testing new or improved technologies.
  • Designing or developing a new or improved melting system process.

On December 18, 2016 the PATH Act became law, making the R&D Tax Credit permanent. This permanency encourages foundries to continue developing processes and delivering safe and innovative products to the public.

If your company performs any of the activities or incurs in any expenses listed above, then they are strong contenders to claim the Research and Development Tax Credit. Send us an email at hello@indagotax.com or visit the Indago website for more information on how we can increase your company’s market value and boost its bottom line through the R&D Tax Credit.