Issue link: http://palletcentral.uberflip.com/i/1370374
26 PalletCentral • May-June 2021 palletcentral.com TAX PLANNING By Jill Neuvirth T his is a topic that we have discussed before. We want to remind wooden pallet companies to be tax savvy. You should not leave this savings on the table when it comes around to tax time. Wood packaging is seen as a high-quality and cost-effective shipping platform option, and is widely accepted as an economical, sustainable and environmentally friendly product. With continued advancements in packaging and container design, and manufacturing distribution and processes, innovating wood packaging professionals using technology can potentially package federal tax savings too, in the way of the R&D tax credit. ese credits are not limited to scientists and medical researchers. For example, companies that lease the PDS™ or other engineering software in their facilities, may qualify for the R&D tax credit. e permanent extension in 2015 made this credit more broadly available across industries and activities. What is the R&D Tax Credit? e R&D Tax Credit is a federal incentive designed to help companies that invest in innovation or rely upon technology, such as the engineering disciplines, to develop their products and processes. To qualify, research project activities must meet the definition of qualified activities defined in IRS Code §41. Projects that qualify must pass a four-part test by meeting the main criteria below: n e activity's purpose must be aimed at the development or improvement of a product, process, technique, formula, invention, or software application. n e activity must attempt to eliminate technological uncertainty present at the outset, concerning the capability, method, or appropriate design for developing or improving the business component. n e activity must be technological in nature, meaning it relies upon the hard sciences (e.g. engineering, biological science, chemical science, computer science); and n e activity must rely on a process of experimentation, which may include modeling, simulation, or systematic trial and error. Qualified costs include wages, supplies or materials used in the conduct of research, and contract research costs. In addition to the Federal Credit, many states have programs that mirror the Federal one, thus offering an additional opportunity. How Can Wood Packaging Professionals Benefit? Today a company that is using some form of technology to develop its products, services or LEVERAGING R&D How the R&D tax credit is impacting wood packaging professionals.