IRC Section 199 Domestic Production Activities Deductions (DPAD) represents a valuable tax incentive for businesses that perform domestic architecture, engineering, and construction services. Eligible engineering and architecture services include consultation, investigation, evaluation, planning, design and supervision of construction. Construction activities must be domestic and can include residential or commercial building improvements as well as infrastructure projects. Generally, the tax deduction can be as much as 9% of taxable income.
Due to the dynamic nature of the food and beverage industry, many companies are prime candidates for tax breaks. Companies developing new or improved food or beverage products, manufacturing processes, and packaging can qualify for sizable federal and state R&D tax credits.
Food Manufacturer Case Study
|Item||Average Annual Amount|
|Qualified Research Expenses (QREs)||$2,300,000|
|Net Federal Credits||$180,000|
|Net State Credits||$210,000|
|Total Net Federal and State Credits||$390,000|
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Examples of Qualified Activities