Project Summary
CSSI Services completed a federal and state R&D Tax Credit study for a food and beverage company with 186 employees. The engagement focused on identifying and documenting qualifying research and experimentation activities conducted throughout the tax year, applying CSSI’s engineering-based methodology to ensure every dollar claimed is accurate, compliant, and fully defensible under IRS scrutiny. Through the test, the company claimed $78,365 in State Credits and $115,411 in Federal Credits.
Project Overview
To qualify for the R&D Tax Credit, each activity must satisfy the IRS four-part test. CSSI’s analysis confirmed that the qualifying activities identified for this company met all four criteria:
- Business Component: Activities were undertaken to develop or improve the functionality, performance, reliability, or quality of the company’s products and processes.
- Elimination of Uncertainty: Qualifying work relied on principles of food science, chemistry, and process engineering as they relate to product development and manufacturing.
- Process of Experimentation: The company engaged in experimentation to resolve genuine technical uncertainty regarding the design, methodology, or capability needed to achieve desired outcomes.
- Technological in Nature: Activities involved a systematic process of evaluating alternatives, including formulation trials and process testing, to resolve identified uncertainties.
| Employee Wages | $14,352,655 |
| Supply Costs | $190,463 |
| Total QRE’s | $1,158,447 |
| Total State Credit | $78,365 |
| Total Federal Credit | $115,411 |
Study Results
The analysis identified a total of $1,158,447 in Qualifying Research Expenses (QREs) across the tax year. The vast majority of that figure was driven by employee wages, which came in at $14,352,655 in total payroll with $1,158,447 attributable to qualifying research activities. Supply costs contributed an additional $190,463 to the QRE pool, while no contractor expenses were identified for this engagement.
Based on those qualifying expenses, the study produced a federal R&D Tax Credit of $115,411 and a state R&D Tax Credit of $78,365, bringing the company’s combined tax credit benefit to $193,776.
Key Takeaways
- Meaningful, immediate impact: This study generated nearly $194,000 in combined federal and state tax credits, real cash flow that can be reinvested directly into the business.
- Wages drove the credit: With over $14.3 million in employee wages, the company’s internal workforce was the primary driver of qualifying expenses, reflecting the significant technical contribution of its team.
- A compliant, defensible result: Every activity claimed was evaluated against the IRS four-part test and documented to withstand scrutiny. CSSI’s methodology prioritizes accuracy and auditability, not just maximum numbers.
- State credits add up: The $78,365 in state credits represents an additional layer of benefit that is often overlooked, underscoring the value of a comprehensive, multi-jurisdictional analysis.
- R&D isn’t just for tech companies: This study is a strong example of how food and beverage companies routinely engage in qualifying research, and how much value goes uncaptured without the right expertise to identify and document it.
Ready to Discover Your R&D Tax Credits Potential?
If your company is developing or improving products, formulas, or processes, you may be leaving significant tax credits on the table. CSSI’s engineering-based approach ensures every qualifying activity is identified, documented, and defensible, so you capture the full value of the work your team is already doing.
Request a Free Analysis today and find out what your business could qualify for.
