R&D Tax Credit for Architecture Firms

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This article explains issues surrounding eligibility for the R&D tax credit for architecture firms. Architecture firms often overlook their eligibility for the R&D tax credit. Many write off the credit because they assume they don’t qualify under the technological in nature requirement. However there are many research efforts often undertaken by architecture firms that will qualify. Some examples are determining alternative materials or structural design, developing alternative plumbing or water systems, improving a structure’s acoustics, and environmental impact analysis. It’s important to remember that success is not a requirement. Firms can get the tax credit for research that didn’t pan out. This enables companies to take more risks on possible innovative solutions in their field. It’s also important to note that whatever your firm develops remains the sole property/intellectual property of your firm.
Architecture firms and those running them can be forgiven for not believing their work qualifies for the R&D tax credit. The eligibility of architecture and design firms working for third parties was only cemented in a 2014 court case Trinity Industries, Inc. v. U.S. which involved the company’s eligibility for the credit. Since then many architecture firms have benefited, and even more will as the news spreads. Some firms have qualified for as much as $250,000 under the R&D tax credit.
Because architecture firms work mainly under contract, determining eligibility for the R&D tax credit for architecture firms can be more difficult than other fields. There are several project types that may or may not qualify under various conditions. Even if a whole project doesn’t qualify for the credit, portions of it might qualify. It’s crucial to engage the services of a tax professional who specializes in both the R&D tax credit for architecture firms. It’s important that the professional have a strong understanding of both the nature of architectural work, and how it fits into the R&D tax credit system. As always, if you are considering applying for the R&D tax credit, keep very careful documentation on all your projects to hand.
The following are some of the basic eligibility requirements for your work to qualify. If you believe your work meets these requirements, it’s definitely time to contact a professional.

The research must be technological in nature, and based on engineering, computer science, physical science, or biological science.

The purpose of the research must be to develop a new or improved level of function, performance, cost reduction, durability, reliability, or quality.

The goal of the research should be to eliminate uncertainty in design, methodology, or capability.

A good R&D tax credit professional should be able to identify and qualify your research activities, calculate your maximum benefit, organize the documentation, and leave your organization well positioned to account for future tax credits. If possible try to choose a firm with specialists in the R&D tax credit for architecture firms.

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