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CHEMICAL DEVELOPMENT

Chemistry is a vast category, ranging from specialty chemicals for fabricating petroleum products, to designing pesticides and fertilizers for agriculture, to producing oils and lubricants for industry. Each step along the development process also has it challenges, and simply developing a new chemical feature is only the beginning of the discussion here. The inherent complexity of the field, and the challenges for manufacturing, lead this to be one of the most well benefitted industries for the R&D Credit.

Some of the broad range of qualified activities include:

  • Chemistry and Procedure

    Underlying the development of chemistry-based products and processes is an iterative design process. These efforts are highly compatible with the R&D Credit, and industries tend to rely heavily on this incentive.

  • Scope of Manufacturing

    Small and large scale manufacturing has very different characteristics. At a small scale, reactions tend to be more easily managed. As scale increases, there are often changes in the outcome, sometimes dramatically. Accordingly, the way in which product is scaled up is as important as its development.

  • Batching and Mixing

    The final stages of development can frequently be excellent opportunities for the R&D Credit. Evaluating and modifying the batching process to produce varied ranges of product are well suited for the R&D Credit.

Case Study

Testing

Testing: Testing is a concern regarding the R&D Credit, as there is an exclusion for certain types of testing. Pesticide Co. divided the testing between that required for proving their process, and that required for FDA approval. They consistently qualified many test expenses.

Chemistry

Farming is in a field known for a straightforward and consistent history. That said, this industry has changed dramatically in the last few decades, and is moving quickly away from its idyllic roots. Pesticide Co. develops pesticides for use in farming. These pesticides often had unintended consequences, such as killing helpful insects. These consequences were at odds with ideal stewardship, so Pesticide Co. continually modified its formulas to more effectively work on certain insects, while limiting the damage done to the helpful insects. This advancement and balance was ideal for the R&D Credit, and Pesticide Co. received a very robust credit.

Credit Estimator

Credit Estimator
* Industry Averages are historical IRS averages, representative of actual results compiled by the IRS (based industry NAICS code.)  Estimates of QREs and credits are approximations, and actual results will vary based on actual client costs and qualifications.

Disclaimer

This is an estimation only and should not be used on your taxes.  All conclusions involved in this calculation are based on the accuracy of the information provided by the end user.  This calculation utilizes historic information and statistical analysis to determine an industry average combined with a mathematically derived constant for the calculation of State and Federal Benefits.  InnovaTAX cannot and will not warranty the results of this estimation and any party using the estimated figure in place of a genuine calculation does so at its own harm and with full warning from EEPB InnovaTAX that such action is improper.  Further, the estimator developed by InnovaTAX is the intellectual property of InnovaTAX and cannot be used in any other manner than on this website or by InnovaTAX employees.  Due to the fact that the information contained within the calculator is based on industry averages, the results will vary from situation to situation and might be above or below the stated figure.  Consult your tax advisor or EEPB InnovaTAX for further information.

Definitions

The information used for the calculation of this credit is based on the Internal Revenue Code and Regulations.  EEPB InnovaTAX gathered information from State legislatures and taxing authorities for each state and relied upon the information provided by the state to develop this estimator.  The definitions of activities that qualify for tax credit are based on the definitions set out in the Internal Revenue Code and by each state authority.

EEPB InnovaTAX maintains this website on a regular basis and makes its best effort to update the estimator but does not warrant the calculations involved in the estimator to contain current law at all times.

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