R&D Tax Law Changes and AMT Relief Applauded by Tax Point Advisors

Nov. 17, 2010 - PRLog -- Regardless of which side of the aisle you might be on, with regard to the expiration of the Bush tax cuts, we should keep in mind the significance of a bill just passed by Congress and signed a few days ago by the President. That small business bill of 2010 allows - for the first time ever - small and mid-size companies (up to $50m in sales) to utilize valuable tax credits, the R&D credit in particular, to offset Alternative Minimum Tax starting in 2010. My firm, Tax Point Advisors, works primarily with small and mid-size clients across the country, and I know first hand that many of our clients have had little or no benefit from R&D credits in previous years, specifically for AMT. The new bill will change that. The key point is that a large majority of Americans work for small to mid-size employers, and many of those employers should enjoy six-figure to even low seven-figure reductions in tax liability as a result of the just-enacted legislation. Interestingly, were we to extend the Bush tax cuts, we would actually be offering cuts in excess of Bush when you consider that the extended Bush cuts would be coupled with the new benefits of the small business bill.

Regardless of the fate of the Bush tax cuts, companies in many industries, and from small companies on up, should be taking a closer look now at filing for an R&D tax credit for 2010 as well as for earlier years. Since the new 2010 small business bill allows for the 2010 R&D credit to reduce 2010 AMT, that AMT reduction could then allow for utilization of R&D credits carried forward from prior years into 2010. Let's say you are a small business owner and you have a potential 2009 R&D credit of $50K, but you were in AMT in 2009. In such case, you couldn't use any of your credit on your 2009 return and the credit carries forward into 2010. Now, let's say further that you also are entitled to a $50K R&D credit for 2010, and in 2010 you are once again in AMT. In such case, your 2010 R&D credit reduces you AMT by $50K, which can then allow for utilization of that $50K credit carry forward from 2009. How significant is this? It's huge: in our example you have $100K in utilization of R&D credits, whereas without the new small business bill you would have zero utilization. And $100K in utilization of R&D credits in this example means a $100K lower tax bill.

Please feel welcome to contact me for further info about the new small business bill and the implications for R&D credits. And also keep in mind the breadth of industries within which companies often qualify for R&D credits, including fabrication, package design, architects, engineering services, civil engineering, plastic mold injection, all sorts of job shops, manufacturing, software development, food products and food processors, furniture makers, farms, wineries, petrochemical, etc. There's a list of most of the qualifying industries at www.taxpointadvisors.com.

Jeffrey Feingold
Founder and Managing Partner
Tax Point Advisors - the R&D tax credit experts
(800) 260-4138
jeffreyfeingold@taxpointadvisors.com
www.taxpointadvisors.com

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Tax Point Advisors assists CPA's & their clients in identifying & capturing their maximum R&D tax credits. WE HAVE A 100% SUCCESS RATE, NEVER HAVING HAD A CLAIM DENIED. 1 (800) 260-4138, www.taxpointadvisors.com