Tax Point Advisors is passionately committed to determining as accurate a credit yield estimate as possible before making a recommendation to move forward with a tax credit study. Our history shows that all but one of our R&D tax credit studies resulted in credit yields within or above our original estimate range. The one credit yield which was slightly under our original estimate resulted in a credit yield of 98% of our original estimate.
Our history has also taught us that a company’s revenue size is not necessarily an indication of its potential credit yield, with many small clients often enjoying six- and in some cases even seven-figure credit yields. Conversely, a large initial credit yield estimate may or may not always be substantiated during the study process because of a larger degree of variables used during the estimation modeling.
Tax Point Advisors has created a conservative, but also extraordinarily accurate, credit yield estimation model. In order to favor a conservative approach, only wage expense is typically considered as part of our initial credit estimate. The additional potential of supplies and contractor expenses that also count for R&D, and which very often increases credit yields, are typically not considered in our initial estimates. This is a great approach for clients, as any increase in credit yield as a result of these additional expenses is identified and documented at zero cost to the client. That’s because our fixed fee remains fixed if the actual credit yield comes in at or above our estimate. (We do, however, in some cases include these additional expense components when they are of such a material amount as to warrant inclusion for modeling purposes.)
Below is a short sample of actual client credit yields for R&D tax credit studies conducted in the past year. The table illustrates the accuracy of our estimating model. We are happy to furnish CPA and client references from the list below.
| Industry: | Revenue: | Estimated Credit: | Actual Credit: |
|---|---|---|---|
| Fabrication/Millwork | $1.5 Million | $40,000–$80,000 | $44,657 |
| MFR-Building Materials | $50 Million | $200,000–$300,000 | $195,271 |
| MFR-Optic Components | $8 Million | $175,000–$300,000 | $282,521 |
| MFR-Robotic Devices | $20 Million | $600,000–$900,000 | $974,000 |
| MFR-Automotive Parts | $20 Million | $75,000–$170,000 | $114,000 |
| Bakery Products | $28 Million | $50,000–$100,000 | $169,343 |
| GIS Mapping | $6 Million | $100,000–$200,000 | $279,524 |
| Telecommunications | $12 Million | $100,000–$200,000 | $310,264 |
