Page 100 - MetalForming October 2013

Blackman on Taxes
By Irving Blackman
The R & D Tax Credit—
How to Lower Your Income-Tax Bill
Sometimes the Internal Revenue Code giveth more than it taketh. Section no. 41 of the code creates the Research and Development Tax Credit, designed to be your tax pal. But he’s a complicated fella.
Here’s why no. 41 is such a good tax friend: It allows you to gain two tax advantages—a deduction and a credit—for a single expenditure. For example, say you spend $1000 for wages on a qualified R & D project. First, you get a $1000 deduction; second, you use the same $1000 to make a cal- culation that gives you a credit, which can be deducted dol-
Irv Blackman, CPA and lawyer, is a retired founding partner of Blackman Kallick Bartelstein, LLP and chairman emeritus of the New Century Bank (both in Chicago). Want to consult? Need a second opinion? Contact Irv:
tel. 847/674-5295
Bir v@ir vblackman.com www.taxsecretsofthewealthy.com
lar-for-dollar to reduce your income-tax liability.
The R & D credit has been around since 1981. Many states have joined the tax-saving fun, awarding companies a cred- it on their state tax bill. The credit is available to every type
of entity—S and C corporations, LLCs, partnerships, etc.
In a nutshell, the R & D tax credit applies to any compa- ny that makes, improves or develops products, software or processes—every-day stuff, not just scientists or engineers
working in a laboratory.
When you consider getting into the R & D credit game, you
must assess two factors:
• Do qualifying activities/projects take place, and
• What amount of qualifying expenses do you incur? Your company is in if you perform any of the following
activities:
• Develop/improve/test new concepts and/or technology • Certification testing
• Manufacture products
• Create new, improved or more reliable products, for-
The Servo Press Technology Experience
September 10, 2013 | Chicago, IL
Thank you to our sponsors:
Visit www.metalformingmagazine.com/servo for event wrap up information.
98 MetalForming/October 2013
www.metalformingmagazine.com