Due to the changing economic climate and increasing demand for fuel efficient cars, the automotive industry is looking for innovative ideas for increasing manufacturing efficiency, cutting costs, and improving product quality. These activities can take up significant resources and capital.
The R&D Tax Credit can allow companies in the automotive industry to increase cash flow, invest in expansion projects, and continue to grow their business. Examples of activities that could qualify for the R&D Credit include:
- Developing new or improved parts, components, and end-products.
- Developing new or improved manufacturing processes to increase throughput, product quality, or manufacturing capabilities.
- Developing new testing or analytical systems for evaluating product quality or performance.
- Developing new tooling or fixtures.
- Developing and testing prototypes.
- Developing and evaluating conceptual designs for potential new products.
For example, Company ABC designs, develops, and manufactures engine parts and components such as valves and pistons. For a car manufacture’s new engine design, Company ABC undertakes the development of a new valve design. For this valve design, the Company evaluates alternative materials, constructions, and mold and tooling requirements. Furthermore, the Company undertakes test runs to optimize the manufacturing process of the valve. In this case, the Company can qualify for activities related to valve design and process development.
Working directly with clients and their CPAs, TRCG has delivered R&D services to a wide spectrum of automotive companies. Through industry expertise, TRCG can quickly understand your company processes, identify potential qualifying projects, and help you capture valuable tax credits.