Posted by Jeffrey Feingold on 04.22.22
At first glance, it may seem unlikely that the poultry industry would have much in common with federal and state research and development (R&D) tax credits. After all, for years, R&D tax credits have been associated with large manufacturing, high-tech and medical companies. However, businesses engaged in the poultry industry are ripe with qualifying opportunities for valuable tax credits associated with the activities they conduct for improved products and/or processes.
The permanent extension of the R&D credit is a great wake-up call for those working in the agricultural, animal husbandry and farming industries to sit up and take notice of their eligibility to apply for the tax credits.
Considering the rapidly changing environment surrounding the U.S. food industry, including changing attitudes concerning organic foods and non-genetically modified organisms (non-GMOs), the need for improved products and processes from farms calls for innovation and experimentation to meet the challenge.
More and more food processing industry companies – including those engaged in poultry-related activities– are moving toward healthier end products and non-GMOs, while still meeting high standards for efficiency to meet the growing food needs of an increasing population. Companies engaged in R&D activities that assist in this effort are often eligible for federal and state R&D tax credits.
Poultry industry business owners should understand how the language of the R&D tax credit enables them to look at their animals as a product, much the same as a metal or aerospace component in the manufacturing industry. Expenses for certain supplies, processing costs, veterinary treatments, disease prevention and the animals themselves can qualify as R&D expenses for testing out various theories and ideas for product and process improvements.
When agricultural companies must develop new processes and techniques to meet new standards, including new environmental standards, there is a good possibility they may qualify for R&D tax credits. More specifically, food companies must experiment with the look, taste and feel of the meat itself.
Activities that are basic to the poultry farm may be excellent items to review for qualification toward the R&D tax credit. For example, the importance of coccidiosis prevention and treatment programs and their effect on growth rate and feed conversion in broiler chickens may be evident to virtually all poultry farmers. The particular methods, however, involved in reduction of poultry house oocyst contamination and the optimization of herd immunity through specific coccidiostat selection, dosing and scheduling are intense with experimentation and can be a major source of qualifying R&D wage and supply expenses. Every farm benefits from a customized approach, and this customization is often a great starting point to discuss qualifying R&D activities.
In fact, the following activities all stand an excellent chance of meeting the four-part test that makes your poultry business eligible for qualifying for significant R&D tax credits:
Find Out if Your Activities Qualify
The R&D tax credit can be a lucrative incentive for American businesses. Given the new permanent nature of the federal tax credit, now is the time to consider whether activities performed by your company qualify for major cash-saving tax credit opportunities.
Tax Point Advisors, a firm with expertise in working with small and midsize companies, works with businesses that may qualify for R&D tax benefits. For more information, call us at 800-260-4138 or please leave us a message below.
