Exploring Research and Development Tax Credits: Life Sciences
Many companies in the life sciences industry have experienced declining research and development (R&D) tax credits because of the incremental nature of the research credit. This trend has heightened the need to explore whether the cost of all qualified activities — such as manufacturing-related R&D — are being considered in the research credit calculation.
Initiatives that may be eligible for R&D tax incentives include:
- Developing production processes for new products, including Food and Drug Administration qualification, validation and clinical testing during Phases I-IV clinical trials
- Establishing a new factory or production line where new technology is employed or new manufacturing techniques are used
The Alternative Simplified Tax Credit (ASC) available for 2007 can benefit life sciences companies that have experienced declining research tax credits because of flat research spending.
Whether you want to explore the credits available under the ASC or the regular R&D tax credit, or compare both, you must be prepared to defend reported R&D tax credits. The Deloitte Tax 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 the computation and information gathering, and a Quality Assurance team that reviews deliverables and computations.
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