Fall 2007 issue of Horizons

INDUSTRy u

ARCHITECTS & ENGINEERS

Architectural and Engineering Firms Should Consider the R&D Tax Credit

The Research & Development Tax Credit is a federal credit for W-2 wages expended in qualified research activities. The net credit is 13 percent of qualified expenses over a base amount. The base amount is computed as a certain percentage of prior years’ average annual revenues. Here’s a very simple example: A/E & Co. is in its fifth year of operations. For the first time, A/E & Co. incurs $200,000 in wages related to the design of a unique structure with significant reduction in high-cost construction materials. A/E & Co.’s average annual revenues for its first through fourth year of operations are more than $3 million. A/E & Co. has the base rate of 3 percent.

23 u winter 2007 issue