Article
Don’t miss out on R&D tax credits for vineyards and wineries
April 26, 2020 · Updated April 22, 2021 · Authored by Liddy Steele and Travis Riley
A version was published in the Protea Financial Blog in March 2020.
R&D is often associated with technology and life science companies from Silicon Valley and San Francisco; but if you head less than 100 miles north into wine country, or any other appellation across the United States, you’ll find the same trend toward innovation being applied to the ancient practices of grape growing and winemaking.
However, many in the wine industry fail to utilize R&D tax incentives offered by federal and state governments. For wineries and grape growers, including those impacted by smoke, the potential tax savings opportunities could be significant.
R&D tax credit overview
The R&D tax credit is available to companies developing new or improved products or processes, including software, that result in increased performance, functionality, efficiency, reliability, or quality.
It’s a dollar-for-dollar tax savings that directly reduces a company’s regular tax liability. There’s no limitation on the amount of expenses and credit that can be claimed each year. If the R&D credit can’t be used immediately or completely, any unused credit can be carried back one year or carried forward for up to 20 years — or indefinitely for California tax returns.
In addition, previously filed tax returns can typically be amended for up to three or four years to claim the R&D credit retrospectively, providing an avenue to recoup previously paid taxes.
FAQs about R&D tax credits
To help break down this complex topic, we’ll address the following common questions vineyards and wineries have about the R&D credit.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.