With increasing demand for new aircraft, military equipment and component parts, research and development (R&D) is the lifeblood of the aerospace and defense industries.You can help manage the cost and risk involved by exploring tax incentives, given the extension of the R&D Tax Credit and the new Alternative Simplified Tax Credit for 2007.

Initiatives that may be eligible for R&D tax incentives include:

• Developing weaponry and technology needed by the military, intelligence agencies and/or border patrol
• Developing and/or implementing production technology that increases quality, reliability and performance or reduces waste, scrap, spoilage or defects
• Creating production processes that are more environmentally friendly

Whichever credit you explore, you must be prepared to defend reported R&D tax credits. The Deloitte Tax LLP R&D team is a national practice of highly experienced tax professionals specializing in R&D tax incentives and includes former senior officials with the Internal Revenue Service and Treasury who participated in drafting the legislation and regulations. These specialists can help you identify qualified R&D activities and assemble documentation to defend your claim, based on their extensive knowledge of the law and your industry.

The Deloitte Tax R&D approach includes a customizable tool that helps to automate computation and information gathering and a quality assurance team that reviews deliverables and computations.

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