Brady Bryan, CEO
The R&D tax credit may be one of the best kept secret that many architecture, engineering and construction firms (AEC firms) are not aware of, and/or not taking advantage of. Some might think that because there are only a handful of designers and one or two principals that it is too small to bother with. Others might think that because they are being paid by clients, that the work performed cannot qualify for R&D tax credits. Or perhaps one may be in landscape architecture, geotechnical engineering or another niche, and incorrectly believes that the R&D tax credit cannot apply to them. After reading this brief article, perhaps you might contact your CPA or qualified consultant to discuss this opportunity further.
While not all activities architects perform are considered qualified research within the meaning of Internal Revenue Code Section 41 (federal R&D tax credit), many architectural design activities may qualify for sizable federal and state R&D tax credits. While it is true that some types of work performed under contract cannot be included, this should be evaluated on a case-by-case basis by a qualified consultant. In short, work paid by clients under contract still may qualify for R&D tax credits.
The federal R&D tax credit is a dollar-for-dollar reduction of tax of up to 6.5% of qualified expenses. Over 40 states offer similar R&D tax incentives, including California and Texas. It is not uncommon for AEC firms to have offices in several states, including California and Texas, and to take advantage of R&D tax credits in multiple states.
Below is a non-exhaustive list of examples of architecture qualified activities:
- Design of building architecture to meet building energy and structural compliance requirements
- Activities to achieve final project design during programming/concept design, schematic design, design development, and construction documents phases
- Conducting site orientation studies and activities
- Evaluating different building sub-system alternatives
- Designing the shape and form of buildings
- Developing planning and elevation drawings
- Conducting design activities on renovation, addition, and interior build-out projects
- Systems engineering
- Designing and developing new/improved products and processes
BRAYN’s Project Team, the BRAYNiacs, are adept at helping engineering, architecture, and construction related services take full advantage of R&D tax credits and related incentives. Additionally, we are very familiar with Deltek and other project tracking tools and processes, which helps us leverage existing data to improve your value proposition.
So whether you are new to R&D credits, or would like a competitive bid, please contact me directly at (888) 773-8356, Ext. 700, or firstname.lastname@example.org.
BRAYN can provide a complementary Phase I analysis that will show estimated R&D tax credits and proposed fees.