What is the Alternative Minimum Tax?

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Curious what alternative minimum tax is?

Watch our latest presentation to discover how the alternative minimum tax impacts the research and development (R&D) tax credit.

Watch on YouTube: https://www.youtube.com/watch?v=SXQv5379oRU

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Swanson Reed is the largest specialist R&D tax credit consulting firm in the United states.  We solely provide services related to the R&D credit and are the only firm in the United States to offer free live webinars on a daily basis. Click here for more information.

Gateway to Growth: R&D in the Oil & Gas Industry

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oil-field-76302_960_720From operating our vehicles to warming our homes, oil and gas is one the most commonly used and important commodities in the world. In 2014, oil provided approximately 38% of the world’s energy needs and is directly responsible for about 2.5% of world GDP. Indeed, oil and gas is a leading component of the world’s energy mix, a trend that will no doubt endure for many years to come.

However, in an increasingly technologically-driven world, the oil and gas industry is changing in two fundamental ways. Firstly, with majority of the world’s ‘easy oil’ already exhausted, the importance of utilizing sophisticated technologies to find and produce tomorrow’s hydrocarbons is becoming increasingly imperative. Secondly, high profile disasters such as Shell’s Brent Spar Incident in 1995 or the recent Deepwater Horizon accident (Perrons, 2014), has resulted in a significant shift in the expectations of the oil and gas industry in regards to safety, environmental stewardship and human welfare. Thus, in the face of these challenges, technology and innovation will play a pivotal role in the success or failure of the future of oil and gas firms.

Generating the question, how can oil and gas companies succeed in an industry where supply is limited and expectations are high? Ultimately, the oil and gas economy in the United States is at a critical juncture and innovation is what is going to push the economy forward.

Without a doubt, investing in R&D to create new and improved technologies is vital in enabling the industry to meet global energy demand. Moreover, with traditional forms of energy becoming harder to find, investing in new technologies will be vital in meeting the needs of an increasingly urbanised population and to combat environmental challenges in the decades ahead.

In addition, several companies may already be partaking in R&D activities and may not be aware of how the federal and state governments seek to support them through the Research and Development Tax Credit. Oil and gas companies are eligible for this credit, which presently values at almost 10 billion dollars, for work activities that are often already being conducted.

Below are some examples of qualifying research activities in the oil and gas industry:

  • Offshore structure design
  • Helidecks
  • Development and testing in a variety of areas including shutdown services, plug and abandonment solutions and turnaround
  • Plant design regarding safety, chemicals, pollution control and pressurization
  • Wastewater solutions
  • Designing and improving drilling

If you would like more information, Swanson Reed is hosting a free webinar on May 10th to discuss the benefits of the R&D tax credit for those in the oil and gas industry. Our specialists will be covering the basics of the credit, exploring an oil and gas case study and detailing the qualifying activities in the oil and gas industry. Could the R&D Tax Credit help your business?

If you’re interested in finding out more, register for our free webinar on EventBrite:
https://www.eventbrite.com/e/free-webinar-how-the-rd-tax-credit-can-benefit-the-oil-and-gas-industry-tickets-24977534478

Contact Swanson Reed’s R&D tax specialists today if you would like to know more about the R&D tax credit.

Texas Leads in Tech Employment

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The Texas economy — long a standout and a major source of Lone Star bragging rights — has gained national attention as the “Texas Miracle.” Over the past eight years alone, Texas’ annual job growth has exceeded the nation’s growth by a factor of four, with Texas adding jobs at a robust 2 percent, even in the face of a severe recession. Furthermore,  despite the downturn of Texas’s key oil and gas industry, other sectors are continuing to boom.  In particular, the technology sector in the state is experiencing persistent growth.

In fact, Texas ranks only second to California in number of technology jobs in America. Aside from popular firms like Google, Apple, Dropbox and Oracle — which all recently constructed or extended major campuses in Austin — nearly two dozen California tech companies also repositioned to Texas or opened outposts there since 2014.

Notably, Texas is home to more than 585,000 technology workers across 34,100 businesses. The state’s tech community continues to enjoy rapid growth, adding 13,800 IT positions within the last year. In addition, tech employers in Texas spend more than $58 billion on payroll annually, with IT employees earning nearly double the state’s average earnings at $99,700 annually. Likewise, Texas leads the country with respect to employment in a variety of sectors within the technology sector, including telecommunications, computer and software wholesaling and electronic repair.

Furthermore, due to the nature of the work involved in the IT sector, companies engaged in any type of technology innovation may qualify for significant federal and state research and development (R&D) tax credits.  The Research and Development (R&D) tax credit provides an estimated $10 billion in annual tax savings for U.S. companies; however the credit remains under-claimed by the majority of qualifying businesses. In fact, the Wall Street Journal estimates that a mere 5 percent of qualifying companies claim the credit. Bearing in mind the broad application of the credit and recent changes to the eligibility criteria, the R&D tax credit could be a huge game changer for companies in the IT sector.

It is important to note that the eligibility for the credit is much vaster than assumed and the credit’s definition of “R&D” is more expansive than just white coat research taking place in a lab. In effect, if you are making a product or process faster, cheaper, greener or more efficient — counting nearly all software and technology development done in the U.S. — then you may qualify.

Contact Swanson Reed today if you would like to know more about how the R&D Tax Credit works and if you’re eligible.

The Impact of Research and Development on Job Creation

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Since 2008, the labor participation rate in the United States has fallen from a high of 67.3% in 2000 to 62.6% today. In light of these figures, what role does research and development (R&D) have on employment – does it increase or decrease the labor market?

To begin with, long-term investment in R&D is a growth strategy, not just for a company, but also for the entire country. Essentially, American businesses of all sizes depend on research and development (R&D) to create new and better products and services that allow them to grow and meet the needs of their customers. Furthermore, for the United States to remain competitive in the global marketplace, an investment in R&D that keeps businesses growing, innovating, and hiring employees in the U.S is required.

However, rather than investing in new technologies, materials, and processes that can help a company grow in the long-term, many companies prioritize immediate profits instead. This can ultimately lead to companies cutting jobs, merging or outsourcing.

In contrast, there have been numerous research studies into how R&D investment helps develop new products and knowledge that drives growth, creates jobs, and improves the national welfare. For instance, a recent study by Huo (2015) revealed that each 1 percent increase in R&D expenditure in the United States raises its employment rate by 0.38 percent. Earlier research by Bogliacino and Vivarelli (2012) also found that R&D expenditure, which fundamentally fosters product innovation, has a job-creating effect.

Nonetheless, access to finance remains a key bottleneck for companies  that are undertaking research and development. As a result, majority of the governments around the world incentivise start-ups to undertake R&D activities through tax breaks. In the United States, the government offers a federal Research and Development (R&D) tax credit and this tax scheme can lead to serious savings on firm’s investments. In fact, 70 percent of credit dollars are actually used to pay the salaries of R&D workers in the U.S.

Moreover, in December 2015, the federal R&D tax credit was made permanent by The Protecting Americans from Tax Hikes Act of 2015 (“PATH” Act). Apart from instilling confidence in US businesses to invest in R&D, the PATH Act included two new provisions that will make it easier for startups and small and medium-sized businesses to immediately benefit from the R&D tax credit.  A tax professional, such as Swanson Reed, with R&D tax credit expertise can assist businesses with qualifying for and claiming the credit. Contact us today to find out if your business could benefit from the R&D tax credit.

How to Claim the R&D Tax Credit for C Corporations

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By definition,a  C corporation, under United States federal income tax law, refers to any corporation that is taxed separately from its owners. A C corporation is distinguished from an S corporation, which generally is not taxed separately. Most major companies (and many smaller companies) are treated as C corporations for U.S. federal income tax purposes. The legal structure of a business can impact how they claim R&D tax credits. In our previous video tutorial, we went through the process of claiming the R&D Tax Credit as an S Corporation.

Therefore, in our latest video tutorial, we go through the method of  claiming the R&D Tax Credit as an C Corporation.

Watch on YouTube at: https://www.youtube.com/watch?v=8BQbFOHLMiY

Or alternatively, watch below:

How to Claim the R&D Tax Credit for C-Corporations – SwansonReed





Topic covered in this video will be: How to claim the R&D tax credit for C-Corporations.

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Swanson Reed is a specialist R&D tax firm and has helped many clients across a diverse range of industries. Contact us for more information on how we can advance your company’s market value and boost its bottom line through the Research and Development Tax Credit.

Delaware Modifies State R&D Tax Credits

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Worth approximately $7 billion annually in recent years, the research and development (R&D) has grown exceptionally since its inception. To begin with, tax credits for spending on R&D were first enacted into federal law in the U.S. in 1981. In the ensuing quarter century, many states have adopted such tax credits, often using the federal tax credit as a prototype. Even so, many state credits have different credit limitations and amounts, as well as varying sunset dates and other important provisions.

Nonetheless, the fact remains, over the past two decades R&D tax credits offered by U.S. states have become widespread and increasingly valuable to firms. The process began when Minnesota became the first state to enact an R&D tax credit in 1982, one year after the introduction of the federal R&D tax credit. Since then, the number of states offering such a credit has risen steadily. Now, Delaware has recently made revisions to their state credit to expand its use. The changes come amid Virginia’s recent amendments last month.

To elaborate, S.B. 200 has made significant amendments to Delaware’s state research and development tax credit. These modifications to the research and development credit, as well as changes made to other Delaware tax credits, were made as a result of a merger between DuPont Co. and Dow Chemical Co.

Previously in Delaware, the aggregate credit limit per fiscal year was $5 million, and no one credit was permitted to exceed 50 percent of a taxpayer’s tax liability. However, for qualified research expenses beginning Jan. 1, 2017, both limitations have been removed. In addition, the credit has become refundable.

Overall, the recent legislation in Virginia and Delaware highlight the importance of knowing the differences that make up this popular credit in each taxing jurisdiction. Undeniably, tax credits for research and development are some of the most popular credits available. For a discussion of the various state research and development tax credit, and the federal tax credit for increasing research activities, contact one of Swanson Reed’s R&D tax specialists today.

How to Claim the R&D Tax Credit as an S Corporation

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As a company grows and considers changing legal structure, it should keep in mind that its legal structure can influence how it and its owners benefit from the R&D credit. For instance, credits generated by S corporations and pass through to partners and shareholders and can typically offset tax associated only with the activity that generated the credits.

To discover more about claiming the R&D Tax Credit as an S Corporation, watch our latest video tutorial on the topic: https://www.youtube.com/watch?v=8BQbFOHLMiY

Or alternatively, watch below:

 

Want more quick video tutorials like this?

Check out our series so far:

Swanson Reed is a specialist R&D tax firm and has helped many clients across a diverse range of industries. Contact us for more information on how we can advance your company’s market value and boost its bottom line through the Research and Development Tax Credit.

R&D Tax Credits Webinar

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This 45 minute webinar looks at teaching companies how to claim the R&D tax credit here in the United States.

Does your company…

  • Design, engineer or manufacture its own products?
  • Look to improve the functionality, performance or reliability of  products?
  • Create new or improved processes in order to make things better, faster or cheaper?
  • Develop protoypes or computer generated models?
  • Develop software, technology or other intellectual property?

If you answered yes to any of the previous questions, your company most likely qualifies for the R&D Tax Credit. Join our specialists as they discuss the details of claiming the R&D Tax Credit and the financial benefits for your business.

Watch below, or alternatively watch on YouTube at: https://youtu.be/aWEyRPohYcs 

Swanson Reed is a specialist R&D tax firm and has helped many clients across a diverse range of industries. Contact us for more information on how we can advance your company’s market value and boost its bottom line through the Research and Development Tax Credit.

Texas Legislature Creates Sales Tax Break for Emergency Preparation Supplies

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doctor-1015624_960_720As heavy rain and flooding plague the Houston area, Texas is preparing to have its first tax-free weekend for emergency supplies.

The first of its kind, Texas has just passed new legislation for a sales tax holiday for emergency preparation supplies. According to Chris Bryan, spokesperson for the Texas Comptroller of Public Account, “There’s a new sales tax holiday it’s called the Emergency Preparation Supplies sales tax holiday. It is really geared toward emergency supplies and this time of year, we’re starting to see some extreme weather coming into the Texas area.”

The details of the tax are:

  • It starts at 12:01AM on April 23rd and runs through midnight on April 25th.
  • No limits have been placed on the number of qualifying items you can buy.
  • Some qualifying items are flashlights, batteries, first aid kits, radios and even some bigger ticket items, such as portable generators and emergency ladders.
  • Non-qualifying items include chainsaws, camping supplies and batteries for motorized vehicles.
  • No certificates or coupons are necessary. You just don’t get charged sales tax at the checkout counter or online.

In addition to this new sales tax, Texas also has an Energy Star sales tax holiday on Memorial Day weekend (May 28-30) for energy-efficient air conditioners, refrigerators, clothes washers and the like. However, the most notable tax break is the Sales Tax Holiday, which runs from Aug. 5 – 7. As in previous years, the law exempts most clothing, footwear, school supplies and backpacks priced under $100 from sales and use taxes, which save shoppers approximately $8 on every $100 they spend.

When evaluating state tax policies, Texas has long been considered one of the most tax-friendly states. This point, combined with the fact that last year Texas was positioned in the top ten states for business, makes the environment for business in Texas particularly enticing. The tax options available for research and development (R&D), in particular, is one of the most generous and helpful taxes available for businesses in Texas. To elaborate, in order to achieve a benefit from R&D in Texas, the taxpayer must elect one of two tax options to which the R&D credit will be applied. Either the Texas franchise tax (up to a 50% cap) or exemption from the sales and use tax. Furthermore, much of the work done on a federal R&D tax credit return applies to a Texas return, so claimants can essentially get two tax credits for one tax workup.

Swanson Reed is a specialist R&D tax firm and has helped many clients across a diverse range of industries. Contact us for more information on how we can advance your company’s market value and boost its bottom line through the Research and Development Tax Credit. 

Filing Amended Returns for LLC’s

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If you made you made a substantial error on your tax return that will affect your tax liability or you received new and crucial information, then you may need to amend your tax return. However, if you do need to amend your business tax return, where and how to file an amended return depends on your business type.

With this in mind, in our latest video tutorial we provide a presentation on filing amended returns for LLC’s.

Watch on YouTube: https://www.youtube.com/watch?v=Fi-m_xna9yU

Or alternatively, watch below:

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Filing amended returns for LLCs – SwansonReed





A presentation on filing amended returns for LLC’s.
http://www.swansonreed.com for more info.

Check out our series so far:

 

Swanson Reed is a specialist R&D tax firm and has helped many clients across a diverse range of industries. Contact us for more information on how we can advance your company’s market value and boost its bottom line through the Research and Development Tax Credit.