October 28, 2016 § Leave a comment
Each night before bed, I go to the pantry, dig out a small piece of wrapped candy, and place it in my two-year-old daughter’s shoe. I usually wake her at 6 am; she is not a morning person so she usually wakes up on the wrong side of the crib. My mom recently told my daughter a story about how when she was a little girl, St. Nicholas would visit her house and leave a little toy or candy in her shoe during the holiday season. Each morning my daughter pulls the little candy from her shoe and laughs a big belly laugh and says “tell me the story about grandma and St. Nicholas again, mom.”
She loves to hear stories from the past. Her favorites include me stepping on a huge rusty nail and getting a foot infection so bad I was in a wheelchair for a month, my brother knocking down a wasps’ nest and getting stung over one hundred times, and a deer jumping through the passenger side of my dad’s truck as it traveled down the highway. These situations were a far cry from entertaining at the time, but she soaks them up with a smile on her face and says “another story, mom.”
Recalling the past got me thinking about some of my fondest work memories traveling to small towns in Iowa. I’ve spent eleven of my last fourteen working years auditing so I have many stories buried deep in my memory – some good and some not good! I thought I would share some of my fondest memories; who knew auditing was so adventurous!
- Staying in motels. Don’t know the differences between a motel and a hotel? Neither did I until I stayed in a motel for three weeks straight. A motel has entrances from the outside. My motel had only seven rooms total – five of which were taken up by auditors. I was there in November, which is a big hunting month. The two rooms not occupied by auditors at the motel were taken up by hunters with their dogs. These dogs barked at random times during the night and were allowed into the motel, but not on the beds as dictated by a large sign in each room that stated “Please keep hunting dogs off bed.”
- Taking advantage of all-you-can eat lunch buffets while on out-of-town engagements. Buffets are quick and cheap so they are always a top pick for lunch. While I did not partake in any contests, several “how much can you eat” contests amongst members of the audit team were conducted under my watchful eye. The record, if you are curious, was seventeen pieces of pizza.
- Auditor to the rescue. Yes, another memory that involves eating. The audit team was at a local lunch spot in small-town Iowa (a deli combined with a pharmacy). While our audit team was chowing down on egg salad sandwiches, a woman next to us began to choke. Our team’s staff auditor, a 7 foot former college basketball player, rushed to the rescue and performed the Heimlich maneuver on this tiny lady. Needless to say, there were some extra beverages consumed that night to celebrate the unlikely hero.
- Watch out for that cow. Driving up to a client located in a rural area one foggy Monday morning, the audit team vehicle came over the top of a hill to find a large black steer standing in the middle of the road. Audit bags and computers went flying around the car as we screeched to a halt just before the car got a taste of hamburger for breakfast.
I had more fun traveling to small towns than I thought possible. Some of the friendships I formed with the other audit team members are still present today – more than ten years later. Sometimes there are situations, both in home life and in work life, that at the time may seem less than glamorous or downright unpleasant. However, these are the situations that will stick with us and, perhaps, build a little character as well…..and if nothing else, make excellent stories!
Wendy Moran, CPA
Assurance Director – McGowen, Hurst, Clark & Smith, P.C.
October 4, 2016 § Leave a comment
Many companies are unaware that the tax code offers a generous Research and Development Credit for which they may qualify. Even those that are aware often fail to capture the full extent of R&D tax credits to which they are entitled. The R&D credit was made permanent in 2015 and will be allowed to offset AMT for 2016 and beyond.
Qualifying R&D activities take place in many industries in which research is thought of not so much as a separate function, but rather as part of the product and process improvement work that goes on every day. Any company that develops, designs, or improves products, processes, techniques, formulas, inventions, or software may be eligible for the credit.
Production processes that may be eligible for R&D tax incentives include the following:
- Designing and developing cost-effective and innovative operational processes
- Integrating new materials to improve product performance and manufacturing processes
- Determining tooling requirements and optimal placement of equipment
- Evaluating and determining the most efficient flow of material
- Designing and evaluating process alternatives
- Designing, constructing, and testing product prototypes
- Developing processes that would meet increasing regulatory requirements
- Reducing labor costs
- Alternative material testing
- Achieving compliance with changing emissions laws and regulations
- Streamlining manufacturing processes through automation
- Increasing manufacturing capabilities and production capacities
- Developing & Implementing new / improved safety enhancements
- Developing new applications
- Improving product quality
- Implementing new production standards and quality assurance processes
- Improving yields
- Reducing manufacturing times
- Optimizing manufacturing processes
- Increasing operating and economic efficiencies
As you can see, there are many ways to qualify for the R&D Tax Credit. Industries that historically have benefited from the credit in the past are listed below:
- Professional Services – Architects, Engineers, etc.
In addition, the State of Iowa offers an R&D Tax Credit to any company that claims a federal credit. If your company is in the industries above or working to improve processes, you may be eligible for the R&D Tax Credit. Contact MHC&S to discuss the credit further and the benefits the credit may offer you!
Nick Finkenauer, CPA
Senior Manager – McGowen, Hurst, Clark & Smith, P.C.