December 12, 2014
Article by Jeffrey Winkleman, Tax Services Partner and Michael Brady, Tax Services Senior Manager, "Surprise! The Government has a Holiday Gift for your Business. Can you Open it?" Featured in Philadelphia Business Journal
Last Friday, the U.S. House of Representatives pulled a fast one. They approved a bill allowing several tax incentives that had expired at the end of 2013 to be extended through December 31 of this year. Although there is no certainty, it is likely that the bill will get final approval by the Senate and the President for 2014, and there is also broad consensus that the incentives will be extended into the future. There is even support for making the tax credits permanent, although that is not likely to happen at this time due to the budgetary impact.
When Congress addresses the credit beyond 2014, it is also likely that the incentive will be made more favorable by adjusting the calculation to make it simpler and to provide an increased credit, and the credit could apply to more businesses. One proposal calls for allowing the credit to offset a start-up company's payroll tax liability, so that even those companies who have not yet achieved profitability could take advantage of the credit.
The R&D tax credit is available to businesses that incur "qualified research expenditures." It is important to note that the research does not have to be successful or result in a product going to market; simply conducting qualified research activities is enough.