Research and Development Tax Credit: Oil and Gas

By January 18, 2018 April 20th, 2018 R&D Tax Credits
The Research & Development (R&D) Tax Credit is available for any company that designs, develops or improves products, processes, techniques, inventions, formulations or software. Yet, many companies don’t take advantage of this beneficial tax incentive since they don’t know if their industry qualifies for it. Under recent regulations, more industries can now qualify for the R&D tax credit than ever before.  Furthermore, companies within the oil and gas industry think they can’t apply for the credit because their activities take place in offshore structures and warehouses and not in R&D departments or laboratories. There is no need for the activities to take place in the areas stated above. The activities only need to fulfill the IRS Four-Part Test to be regarded as qualified research activities (QRAs).

Oil and gas companies are strong candidates for the Research and Development Tax Credit since they consistently develop and improve their products and processes. Companies within this industry spend on qualified research expenses (QREs) such as: employee wages, supplies and outside contractors who help obtain a finished product in a time and cost efficient manner. Additionally, oil and gas companies constantly conduct QRAs with the goal to improve the production and transportation processes.

Listed below are examples of potential activities that may qualify for Research and Development Tax Credit benefits:

  • Developing and improving refining processes.
  • Designing and testing drills.
  • Developing and conducting environmental and safety testing and remediation.
  • Testing plug and abandonment solutions, turnaround and shutdown services.
  • Designing a plant and testing for pressurization, safety, chemical segregation and environmental and pollution control systems.
  • Designing offshore structures and its quarters, equipment skids, helidecks, generators, etc.
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 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 Research and Development Tax Credit.