Last month we sent out a notice alerting you to the passage of the “Protecting Americans from Tax Hikes (PATH) Act of 2015” (you can read the full notice https://www.newburg.com/?p=1314 from our website). We were excited to see that the research and development (R&D) tax credit was permanently extended. This is a huge victory for U.S. businesses that were previously frustrated by the regular uncertainty around the R&D credit. Many of our clients engaging in innovative work or processes can take advantage of this tax credit, as its applications are expansive. The credit applies to many different industries. In addition to the permanency provision, the package also provides for significant expansion of the R&D credit.
Eligible small businesses ($50 million or less in gross receipts) may claim the R&D credit against the Alternative Minimum Tax (AMT), beginning in January 2016. This will benefit a significant number of closely-held businesses and their shareholders who previously had to defer some or all use of their credit due to the AMT limitations. Additionally, certain small businesses ($5 million or less in gross receipts) will have the ability to offset the credit against payroll tax liability (capped at $250,000 for up to five years). There are many complexities to this law and how to apply it to your business.
Please contact us today and we can start planning on how to use this credit to help your business grow.
Newburg & Company, LLP