Aiding the Aviation and Aerospace Industries with the R&D Tax Credit

The aerospace and aviation industries are currently driving America’s economic growth by providing 15% of the US Gross Domestic Product and offering approximately 11 million domestic jobs. Consequently, we depend on this highly technical workforce to keep expanding America’s innovation. Appropriately, aviation and aerospace companies are highly rewarded by the federal and state government when they apply for the R&D Tax Credit. Companies within these two industries are perfect candidates for the tax incentive since they are constantly designing, developing and improving their products and processes.
Aerospace engineers, technologists, designers and machinists spend a considerable amount of their time developing and improving designs that will allow their companies and their country to remain competitive in today’s marketplace. The activities conducted by the highly skilled professionals comprise of applied research such as air transportation, military operation and space-based communications. The constant technological evolution provides the opportunity for companies in these industries to take advantage of the R&D tax credit.
Below are some of the most common qualified R&D activities in the aerospace and aviation industry:

Designing new aircraft and spacecraftr
Conducting design validation testing to satisfy regulatory requirementsr
Generating prototypes and first articles for testing and validationr
Measures to improve product qualityr
Developing new or improved manufacturing processes and technologiesr
Last week the PATH Act became law, making the R&D tax credit permanent. This permanency will help aviation and aerospace manufacturers to continue developing and delivering safe and innovative products to the public. These new changes will also spur technological development from other companies who felt uncomfortable making a big investment in technology due to the uncertainty of the return on their investment.
The Kuhler Tax Credits team has been working with a fascinating aerospace company that specializes in satellite manufacturing. The company is a startup and every activity related to the development and manufacturing of the satellites is considered as a qualified research activity under the IRS regulations, even failed projects conducted by the company. The company’s effective rate, which is the division of the R&D tax credit over the R&D expenses, is 19%. This result is substantially advantageous for the company given that the average effective rate is 12-13%. So far, the accumulated federal and state R&D tax credits obtained by Kuhler is in the multi-million dollar range for only a few year accumulation period.
Does your company perform any of these aerospace or aviation activities? Visit the Kuhler Tax Credits website www.kuhler.com or email us at info@kuhler.com to learn more about the Research and Development Tax Credit.