Can Construction Companies Claim the Research Tax Credit?
Congress created the Research Tax Credit (IRC § 41) to reward companies for investments in innovation and improvements, but surprisingly few companies take full advantage of the opportunity for savings. Even companies that are aware of the credit often overlook costs that are eligible as qualified research expenditures (QREs). That is because the scope of legitimate QREs goes far beyond what most businesses would consider to be research-related costs. Some commonly known research expenditures include patent developments or new products. However, others may be overlooked, such as the work involved in designing, creating and implementing an electrical support system to meet certain tolerance specifications for a manufacturing line. Qualified costs might also include amounts paid for evaluating a customer’s tolerance requirements or testing for quality assurance standards. Unlike typical tax deductions, the Research Tax Credit directly reduces income taxes, so the potential for savings is
