Aerospace Cashes in on Bailout Budget Tax Credits

This past week, President Bush signed into law H.R. 1424. After months of negotiations, Democrats, Republicans and the White House came together to pass an increase and extension of the R&D Tax Credit as part of the Emergency Economic Stabilization Act of 2008 (click to download the PDF).

The Federal Research & Development Tax Credit has been extended two years through December 31, 2009. As part of the extension, the Alternative Simplified Credit was increased from 12 percent to 14 percent. Additionally, the extension terminated the Alternative Incremental Credit.

The federal R&D Credit continues to provide companies an opportunity to claim an income tax credit for activities centered on the development or improvement of products, processes, software, techniques or formulas. This credit generates significant tax savings for US companies in the manufacturing, technology, software, engineering, and aerospace/defense industries.

“At a time when the economy is struggling and international competition continues to battle U.S. companies, the R&D Credit is a critical part of the solution for success. While we would like to see the R&D Credit become permanent part of the tax law, we applaud Congress and the White House for extending this important tax incentive,” mentioned Michael Krajcer, TPG partner and firm’s Technical Director. Michael Krajcer is an attorney, former E&Y national tax practice member, and spent 13 years with the IRS auditing large-case R&D Credit claims. Mike continued, “This extension of the R&D Credit is another strong Congressional indicator for taxpayers to continue taking advantage of this incentive.”