Tax

Credits and Incentives

 

Remaining compliant with the ever-changing landscape of tax law can be a time-consuming and costly challenge for many taxpayers. Federal and state tax codes, however, present a number of valuable incentives that can greatly optimize your tax position and improve cash flows. These benefits range from special tax deductions to dollar-for-dollar reductions of tax due designed to incentivize a wide range of investments and activities.

Leveraging the Tax Code to Benefit Your Company

Our specialty tax services team helps companies identify targeted tax benefits and navigate complex tax issues in order to minimize their federal and state tax liabilities. Our goal is to help organizations shift their focus from mere tax compliance to strategic, proactive tax optimization.

Our areas of specialization include:
Fixed Asset Incentives
Cost Segregation Study – The goal of cost segregation is to accelerate valuable depreciation deductions arising from the purchase, construction, or renovation of a commercial or residential building. By reclassifying items from real property to personal property for federal income tax purposes, an engineering-based cost segregation study can generate cash flow and reduce your tax liability.  

Fixed Asset and Repair Studies – Proper identification and classification of fixed assets and repair costs under the final Tangible Property Regulations can help you establish units of property and make critical capitalize versus expense determinations that can greatly reduce your effective tax rate. 

Historic Rehabilitation Tax Credit – One of the most successful federal government community revitalization programs, this incentive program rewards private investment in historic properties, including offices, housing, retail, industrial, schools, and churches.
Research & Development Incentives
Research and Development (R&D) Tax Credit – Companies that develop new or improved products and processes are likely eligible for the R&D tax credit. As a dollar-for-dollar reduction of tax due, the credit is a powerful tool in helping to subsidize R&D costs. The credit is available to offset federal taxable income; however, some taxpayers can even use the credit against their payroll tax liabilities. In addition to the federal credit, a number of states offer R&D credits to offset income, payroll, and sales taxes. 

Other R&D Incentives – In addition to R&D tax credits, state and local governments reward investment in R&D through sales and use tax exemptions, property tax exemptions, and cash grants. 
Manufacturing and Production Incentives
Section 199 Deduction – If your company produces property in the U.S. or engages in engineering or architectural services, you likely qualify for the Section 199 Deduction, also known as the Domestic Production Activities Deduction (DPAD). Enacted in 2004 primarily as a manufacturing incentive, eligibility for the DPAD actually reaches far beyond traditional manufacturing activities. The benefit — a 9% deduction rate — is available to just about all taxpayer types, including corporations, flow-through entities, and trusts.  

UNICAP Studies and Inventory Optimization – The capitalization of inventory and related costs under the uniform capitalization (UNICAP) rules is a critical element for taxpayers that produce or manufacture property. An in-depth understanding of these complex rules can lead to substantial tax savings by optimizing inventory and cost allocation methods.
Hiring Incentives
Work Opportunity Tax Credit – Businesses can benefit from tax credits for hiring, retaining, and retraining employees of specific targeted groups, including veterans, youths, and others.

State and Local Hiring Incentives – Many state and local governments offer significant incentives for investing in jobs within their jurisdictions. These benefits range from income tax credits to property tax abatements. 
Sustainability Incentives
Section 45 Production Tax Credit (PTC) – A per-kilowatt-hour tax credit, the PTC is a critical element for financing the development of renewable energy. 

Investment Tax Credit (ITC) – Entities that qualify for the PTC may choose to utilize the ITC “energy percentage” calculation after determining the basis of energy property.

Section 45L Residential Efficiency Tax Credit – Residential construction and development companies should be leveraging the New Energy Efficient Home Tax Credit on new construction, reconstruction, and rehabilitation projects.

Section 179D Commercial Efficiency Tax Deduction – Commercial property owners can benefit from an immediate tax deduction on new and remodeled buildings for specific efficiency strategies related to interior lighting, heating, cooling, ventilation, and hot water systems, as well as the building envelope.

Utility Programs – In addition to government tax programs, many utilities offer efficiency incentives to individuals and businesses that make investments to reduce energy consumption.

The EKS&H Advantage

  • Dedicated team of experts, including engineers, attorneys, CPAs, CFAs, and ASCPs
  • Services customized to your specific organization, industry, and business structure
  • Tax professionals with decades of Big Four, national tax office, and international experience
  • A long-term relationship based on rapid responsiveness, availability, and comprehensive strategic thinking
  • Proactive planning discussions to identify ways to reduce tax burden — now and in the future
  • Leaders in the AICPA Tax Sections and Leading Edge Alliance (LEA) North American Tax Group

Talk with Our Service Area Lead

Connect with Lawrence Knutson to discuss your federal credits and opportunities options.

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