{"id":1193,"date":"2024-07-30T14:03:00","date_gmt":"2024-07-30T19:03:00","guid":{"rendered":"https:\/\/www.mgocpa.com\/?post_type=perspective&#038;p=1193"},"modified":"2025-07-21T09:38:03","modified_gmt":"2025-07-21T14:38:03","slug":"case-study-how-mgo-helped-product-development-company-maximize-rd-credit","status":"publish","type":"perspective","link":"https:\/\/www.mgocpa.com\/perspective\/case-study-how-mgo-helped-product-development-company-maximize-rd-credit\/","title":{"rendered":"Case Study: Helping a Product Development Company Maximize the R&amp;D Credit"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\">Background:&nbsp;<\/h2>\n\n\n\n<p>Since the 1980s, the <a href=\"https:\/\/www.mgocpa.com\/solution-industry\/rd-tax-credits\/\" target=\"_blank\" rel=\"noreferrer noopener\">Research and Development (R&amp;D) credit<\/a> has been providing businesses with incentives to innovate.<\/p>\n\n\n\n<p>An essential component of qualifying for the R&amp;D tax credit is incurring research and experimental (R&amp;E) expenses.<\/p>\n\n\n\n<p>Until recently, businesses were able to deduct these expenses in the year paid or make an election to amortize them over 60 months. However, a provision in the Tax Cuts and Jobs Act of 2017 changed how businesses deduct R&amp;E expenditures.<\/p>\n\n\n\n<p>Starting in 2022, businesses must capitalize and amortize these expenses over 60 months rather than immediately deducting them. This change has been financially devastating for companies investing in innovation.<br><br><\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\">Challenge:<\/h2>\n\n\n\n<p>A product development company focused on the nutrition and fitness markets faced significant expenses associated with developing innovative workout products and ingestible pre- and post-workout recovery supplements.<\/p>\n\n\n\n<p>With an annual revenue of $122 million, the company made considerable investments in R&amp;D \u2014 totaling $2 million to $4 million over the last several years.<\/p>\n\n\n\n<p>Since the company could not deduct those expenses in the year they were incurred, it needed to recoup some of the costs to sustain its research initiatives.<br><br>&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Approach:<\/h2>\n\n\n\n<p>MGO brought its extensive tax experience to the table to help this product development company navigate the complexities of the R&amp;D credit.&nbsp;&nbsp;<\/p>\n\n\n\n<p>We verified the company&#8217;s R&amp;D activities aligned with the four-part test to qualify for the credit and all projects were rigorously documented with records directly linking them to the four-part criteria.<br><br><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Value to Client:<\/h2>\n\n\n\n<p>Through careful evaluation and strategic planning, MGO helped the client secure a substantial net federal and state R&amp;D credit benefit of $250,000 for a single tax year. The company used these credits to offset its federal and state tax burden.&nbsp;<\/p>\n\n\n\n<p>This demonstrates the significant impact that R&amp;D credits can have on a company\u2019s financial health. The $250,000 credit enabled the client to reinvest in its innovative product pipeline, maintain a competitive advantage, and continue developing groundbreaking nutrition and fitness products.<br><br><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><em>Your Trusted R&amp;D Tax Credit Advisor<\/em><\/h2>\n\n\n\n<p><em>MGO\u2019s tax professionals have more than 30 years of experience helping you document, file, and defend tax credit claims.<\/em><\/p>\n\n\n\n<p><em><a href=\"https:\/\/www.mgocpa.com\/contact\/\" target=\"_blank\" rel=\"noreferrer noopener\">Contact MGO today<\/a> to discover how we can help you maximize <a href=\"https:\/\/www.mgocpa.com\/solution-industry\/rd-tax-credits\/\">R&amp;D tax credits<\/a> to support your growth and innovation journey. Our team is ready to guide you through the complexities of tax incentives and deliver tailored solutions that fuel innovation and business growth.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Background:&nbsp; Since the 1980s, the Research and Development (R&amp;D) credit has been providing businesses with incentives to innovate. An essential component of qualifying for the R&amp;D tax credit is incurring research and experimental (R&amp;E) expenses. Until recently, businesses were able to deduct these expenses in the year paid or make an election to amortize them [&hellip;]<\/p>\n","protected":false},"featured_media":1194,"template":"","meta":{"_acf_changed":false,"content-type":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"perspective_topic":[22,54,102,16,23,55],"perspective-type":[72],"class_list":["post-1193","perspective","type-perspective","status-publish","has-post-thumbnail","hentry","perspective_topic-manufacturing","perspective_topic-tax-advisory","perspective_topic-tax-credit","perspective_topic-tax-guidance","perspective_topic-tax-incentive","perspective_topic-tax-planning","perspective-type-case-studies"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Case Study: R&amp;D Tax Credit for a Product Development Company - 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