R&D Tax Credits for Agribusiness

More Opportunity for Agribusiness Companies Prior to 2004, the R&D tax credit was only available to companies that discovered information that was new to the world. This discovery test was eliminated after 2003, and now the information discovered only needs to be new to the taxpayer, therefore there are more opportunities for agribusiness companies than ever before.

Many ag entities consistently change their existing processes or develop new ones to increase productivity or enable them to produce new or improved products. Therefore, the activities that many agribusiness organizations perform on a day to day basis now qualify for the credit.

Ask yourself:  Has your operation produced new or improved agriculture related products recently?  Have you modified product formulations and/or growing processes in increase yields, reduce the reliance on chemicals, accelerate weight gain, or other improvements to the efficiency of your operation? 

Qualifying activities could include:

• Developing new strains of crops, plants or livestock
• Developing and implementing new ways to protect crops and livestock from disease
• Developing products with lengthened shelf lives
• Testing new technology or materials
• Developing new processing techniques or facilities

Three Areas of Qualifying Expenses
The R&D tax credit is based upon a percentage of qualifying expenses. Once it has been determined that a company is performing qualifying R&D tax credit activities, certain costs related to those activities must be identified and allocated to the qualifying R&D tax credit activities. The three areas of qualifying expenses include:

• salaries and wages
• supply costs
• contract research expenses

Contact our team of agribusiness experts for more information R&D tax credits or with questions regarding tax and assurance topics for your business.

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