•  
June 27, 2016

R&D Study Yields More than $1 Million in Tax Credits for Cosmetics Manufacturer

Client Profile

Annual Revenue: $25 million
Industry: Manufacturing
Ownership: Privately-owned C Corporation
Number of Employees: 50
Location: Southern California

CBIZ provides research and development tax credit services.Issue

A private label manufacturer serving cosmetic companies also develops products and formulations for its own product line. The company had built up a fairly large net operating loss carryforward before turning profitable. As the company was quickly depleting its NOLs, its tax preparation team sought to identify applicable tax credits and incentives to minimize its tax burden.

Solution

Our team reviewed tax returns, financial data, and performed interviews of company employees in a variety of departments, including production, compounding, sales, engineering, and management. We identified qualifying activities in product development and new and improved manufacturing process development efforts. We were also able to go back into the loss years and identify qualifying activities to help the company generate research and development tax credits that could be used to immediately reduce the estimated tax payments the company would be making for the upcoming tax year, thus immediately improving cash flow.

Outcome

The R&D tax credit study generated more than $1.1 million in total research and development credits with an expected $125k-$150k in credits to be generated yearly on a go-forward basis. The company was then able to take the immediate cash savings and use it to fund further growth. Additionally, the credit study identified areas for documentation improvement to help enhance credit positions and further maximize future research credit claims.

Identifying the Credits You Deserve

Discover how our R&D tax team can help you make the most of qualifying activities.

Download our case study


Copyright © 2016, CBIZ, Inc. All rights reserved. Contents of this publication may not be reproduced without the express written consent of CBIZ. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

CBIZ MHM is the brand name for CBIZ MHM, LLC, a national professional services company providing tax, financial advisory and consulting services to individuals, tax-exempt organizations and a wide range of publicly-traded and privately-held companies. CBIZ MHM, LLC is a fully owned subsidiary of CBIZ, Inc. (NYSE: CBZ).

Accelerated Recovery Resources

Access articles and tools to help your business generate cash, improve leverage, and align & transform as you recover from the pandemic.

COVID-19 Resources

Access all COVID-19 related articles to help your business respond to the pandemic.

Insights in Your Inbox