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R&D Case Study: Improving Manufacturing Process

Another study that we recently completed for a company located in Western New York was one that involved a significant overhaul of their entire manufacturing process. This company, from 1958 through 2001, essentially employed the same manufacturing process, which relied heavily upon the use of manual labor. In 2000 the company decided to move forward with a new type of manufacturing process, which was significantly more efficient, with a great amount of reliance placed on automation and technology. Subsequent to the installation, testing, and actual construction/integration of the new manufacturing process, it was determined that there was a Research and Development tax credit in the amount of approximately $100,000. It was derived from the actual wages that were paid to employees who were assisting in the design, implementation and testing of the new manufacturing process, which were in excess of $100,000, could be applied.

Therefore, it’s important to remember that in addition to the development and improvement of specific products, a significant improvement in the entire manufacturing process can qualify for the R&D credit as well.

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ABOUT US: Freed Maxick CPAs is Western and Upstate New York’s (NY) largest public accounting firm and a Top 100 firm in the U.S. Freed Maxick provides audit, tax and consulting services to closely-held businesses, public (SEC) companies, not-for-profits and governmental entities in Buffalo, Rochester, Syracuse, Albany and NYC, New York.