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Research and Development Tax Credit

You spend countless hours developing your brews so they taste perfect. As a result of this hard work, you may be eligible for the research and development tax credit.

According to the IRS website, this credit is available to taxpayers who incur reasonable costs while performing “activities intended to provide information to help eliminate uncertainty about the development or improvement of a product.”

Because breweries develop formulas, process, and techniques to craft the perfect beer, they often times qualify, however, many miss out on taking it. You may take this credit during the year earned, or you may be able to claim it for future or prior tax years, so it may be worth your while to review your returns with the tax professionals of the Brewers Professional Alliance.

Below are key things to know:

  1. R&D expenditures typically include all costs incurred during the development or improvement of a product, including fees related to securing a patent, such as attorney fees

  2. A product can be any of the following: formula, invention, patent, pilot model, process, technique, or similar property

  3. The following expenditures do not qualify: quality control testing, advertising or promotions; consumer surveys; efficiency surveys; management studies; or the acquisitions of someone else’s patent, model, production, or process

To learn more read, Current-year Deduction of Research & Development Expenditures

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