This company’s products are used in new construction as well as retrofit work. Their products can be used in every sector, including commercial, agricultural, institutional, and governmental fields. The buildings vary depending on geographical location, complexity, and the customer’s needs. Extensive modifications on the design and the components to support the buildings are required. In addition, the company continually develops new products to improve existing products, meet new environmental regulations and comply with safety requirements.
BGI’s Value Add
The company had never taken the credit before engaging the services of BGI. However, they had employed a Big 4 accounting firm to conduct a study, but they did not find any research and development (R&D) activities. BGI was retained to conduct an R&D study. Based on our expertise in the industry, qualified design, engineering and drafting activities were identified for the credit due to the company’s custom engineered structures. Furthermore, an entirely different Big 4 firm who was conducting the financial audit signed off on this resulting R&D tax credit.
During the first year study, BGI identified over 500 employees that conducted qualifying activities, which resulted in a credit of over $300,000. During the following years, BGI increased the credit to $800,000 by relying on project efficiencies, streamlining the process, and utilizing non-intrusive, proprietary tools. This helped to reduce the time commitment needed by the company for the R&D study.
BGI analyzed the company’s time tracking system to capture the employees’ time on complex building development. The time tracking system helped to distinguish time spent on standard and complex projects.
In addition, BGI identified an extensive number of subcontractors (engineers and drafters) who are used solely for highly complex projects. Subcontractor expense accounted for approximately $650,000 in Qualified Research Expenditures (QREs). In addition, BGI identified over $100,000 in supplies that were consumed during the testing of new products or process improvements.
BGI understands the documentation process to substantiate the credit and demonstrate the nexus between the Qualified Research Activities (QRAs) and associated costs. BGI worked with the company to identify detailed documents that demonstrated drawing modifications, new development, and the testing that was conducted. BGI also found additional costs through the gathering of invoices and documentation that would have otherwise been missed.
BGI planned new strategies so that the company could optimize the next claim by further investigating their product improvements, new product development and business component/prototype costs.
The work with this company demonstrates how beneficial the RTC can be for the engineering and construction industry.