The proliferation of turnkey, engineering procure and construct (EPC) and design/build contracts is changing the landscape in engineering and construction. If your firm participates in an EPC or design/build effort, it may be assuming new research and development (R&D) risks.
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 (ASC) for 2007.

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

• Development of new plant and process assays or expansion and optimization of existing plant operations
• Constructability reviews intended to identify improvements to asset or process design
• New production systems or high-tech processes to produce or treat hydrocarbons, hydrogen, ammonia, ethanol and/or other molecular compounds

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 Department 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 the computation and information gathering, and a quality assurance team that reviews deliverables and computations.

For more information, see the attachment below.