Case Study: How a Precision Manufacturer Recovered $47,000 in R&D Credits
Plan your expenses and deductions strategically each year
Egestas tincidunt ipsum in leo suspendisse turpis ultrices blandit augue eu amet vitae morbi egestas sed sem cras accumsan ipsum suscipit duis molestie elit libero malesuada lorem ut netus sagittis lacus pellentesque viverra velit cursus sapien sed iaculis cras at egestas duis maecenas nibh suscipit duis litum molestie elit libero malesuada lorem curabitur diam eros.
- Morbi fringilla molestie magna sed dictum. Praesent pharetra turpis augue.
- Cras mi purus, viverra vitae felis sit amet, tincidunt fringilla lorem.
- non mattis urna ex nec sem. Donec varius diam et suscipit venenati proin tincidunt
- Quisque euismod posuere lacus sit amet volutpat. Praesent vel imperdiet
Maintain accurate and organized financial records for easy reporting
Tincidunt pharetra at nec morbi senectus ut in lorem senectus nunc felis ipsum vulputate enim gravida ipsum amet lacus habitasse eget tristique nam molestie et in risus sed fermentum neque elit eu diam donec vitae ultricies nec urna cras congue et arcu nunc aliquam at.
Talk to a tax professional for expert guidance
At mattis sit fusce mattis amet sagittis egestas ipsum nunc scelerisque id pulvinar sit viverra euismod. Metus ac elementum libero arcu pellentesque magna lacus duis viverra pharetra phasellus eget orci vitae ullamcorper viverra sed accumsan elit adipiscing dignissim nullam facilisis aenean tincidunt elit. Non rhoncus ut felis vitae massa mi ornare et elit. In dapibus.
- Morbi fringilla molestie magna sed dictum. Praesent pharetra turpis augue.
- Cras mi purus, viverra vitae felis sit amet, tincidunt fringilla lorem.
- non mattis urna ex nec sem. Donec varius diam et suscipit venenati proin tincidunt
- Quisque euismod posuere lacus sit amet volutpat. Praesent vel imperdiet
Personalized Marketing: AI helps in analyzing customer data to create personalized marketing campaigns
At mattis sit fusce mattis amet sagittis egestas ipsum nunc. Scelerisque id pulvinar sit viverra euismod. Metus ac elementum libero arcu pellentesque magna lacus duis viverra. Pharetra phasellus eget orci vitae ullamcorper viverra sed accumsan. Elit adipiscing dignissim nullam facilisis aenean tincidunt elit. Non rhoncus ut felis vitae massa. Elementum elit ipsum tellus hac mi ornare et elit. In dapibus.
“Amet pretium consectetur dui aliquam. Nisi quam facilisi consequat felis sit elit dapibus ipsum nullam est libero pulvinar purus et risus facilisis”
Use accounting and tax software to make management easier
Placerat dui faucibus non accumsan interdum auctor semper consequat vitae egestas malesuada quam aliquam est ultrices enim tristique facilisis est pellentesque lectus ac arcu bibendum urna nisl pharetra bibendum felis senectus dolor commodo quam elementum sapien suscipit qat non elit sagittis aliquam a cursus praesent diam lectus tellus mi lobortis in amet ac imperdiet feugiat tristique nulla eros mauris id aenean a sagittis et pellentesque integer ultricies sit non habitant in cras posuere dolor fames.
A precision manufacturing company with 85 employees had been designing custom tooling, refining CNC machining processes, and developing proprietary fixtures for over a decade. Their general CPA had never raised the possibility of the R&D tax credit because the company didn't have a formal "R&D department."
The Situation
The company spent approximately $1.2 million annually on employee wages tied to engineering, process development, and quality testing. Their engineering team regularly worked on eliminating uncertainty around material tolerances, optimizing cycle times for new part geometries, and developing custom fixturing solutions for complex assemblies. None of this had ever been documented or claimed as qualifying research activity.
What We Found
After conducting a detailed R&D credit study across the three most recent open tax years, our team identified qualifying activities across multiple departments that the company had never considered. The engineering group's work on new tooling designs and process parameters clearly met the four-part test. Quality testing activities involving experimentation with new materials and tolerances also qualified. Even portions of the production team's time spent on first-article development and prototype runs were includable.
The total qualified research expenses across three years exceeded $340,000, producing a combined federal R&D credit of $47,600 using the Alternative Simplified Credit method.
The Outcome
The company filed amended returns for all three years and received refund checks totaling $47,600 in federal credits. The state credit analysis added another $6,200 on top. The entire process from initial assessment to filed amendments took approximately eight weeks.
Going forward, the company now claims the R&D credit annually as part of their standard tax filing, generating an estimated $18,000 to $22,000 in recurring annual federal savings. The study documentation also supports their Section 174A deduction treatment, ensuring they capture the full immediate expensing benefit on qualifying domestic R&D costs.
Key Takeaway
Manufacturing companies are among the most underserved when it comes to R&D tax credits. If your team is solving engineering problems, developing new processes, or designing custom solutions for customers, the work almost certainly qualifies. The absence of a formal R&D lab doesn't mean the absence of qualifying research activity.
