Tax Incentives Blog

Darren Labrie

Darren Labrie
Darren brings more than 20 years of experience in tax credits and business incentives. In his current role, he focuses on the overall operations of the practice and ensuring the highest level of service to clients.
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Recent Posts

You Complete Me: CPA Firms Partner with Tax Consultants to Attract Business

Written by Darren Labrie. Updated Jan 9, 2019.

There is no shortage of famous movie quotes in the lexicon of pop culture, and the phrase “You complete me” uttered by Tom Cruise in the film Jerry Maguire certainly belongs somewhere at the top of the list. While expressed with complete sincerity in the film to his love interest, the phrase has enjoyed longevity having been oft quoted, sometimes as a comedic device, such as in the film Austin Powers and the TV show The Office, and in the deranged rantings of the villainous Joker in the Batman film The Dark Knight.

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5 Commonly Overlooked R&D Tax Credit Expenses In Software Development

Written by Darren Labrie. Updated Sep 8, 2016.

The software industry is notorious for overlooking qualified research expenses for the R&D tax credit. Often, companies aren’t aware that their business is incurring research expenses and/or have overlooked possible research activities being conducted each year.

Tax incentives and credits are an important opportunity for companies to develop and grow their business. One of the most lucrative tax credits offered today is the research and development (R&D) tax credit, which allows companies to offset federal and state income tax liability when incurring software R&D expenses.The following are five of the most commonly overlooked qualified research expenses in the software industry:

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Satisfying Additional Requirements For Internal-Use Software R&D Claims

Written by Darren Labrie. Updated Aug 11, 2016.

Many companies don’t just develop software products for sale to clients or customers. Software development companies also create internal-use software to be used primarily for operating their business.

The following are additional requirements that need to be satisfied to treat your internal-use software development activities as eligible research and experimentation expenditures for the R&D tax credit.

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R&D Tax Credits: Qualifying Software Development Contractor Expenses

Written by Darren Labrie. Updated Jul 28, 2016.

It is common for corporations to hire third-party software developers when conducting research and development activities, and the associated expenses are often overlooked since the consultants are not employees of the corporation.

When contractors perform research for your software development, you may incur both expenditures that would constitute qualified expenses and those that would not. For example, wages paid to a contractor would qualify, but travel expenses or paying rent would not. 

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Do Third-Party Software Developers Qualify For The R&D Tax Credit?

Written by Darren Labrie. Updated Jul 21, 2016.

As companies look to claim R&D tax credits for their software development activities, one often overlooked expense is payments made to consultants or contractors performing research activities for the company.

This qualifying expenditure for contract research expenses is defined under IRC §41(b)(3)(A) as 65% of “any amount paid or incurred by the taxpayer to any person (other than an employee of the taxpayer).”

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The Key To Capturing R&D Tax Credits For Internal-Use Software

Written by Darren Labrie. Updated Jun 30, 2016.
Under Internal Revenue Code (IRC) section 41(d)(4)(E), research with respect to internal-use software is an eligible expense for the R&D tax credit under several circumstances.

As more and more companies invest in software development activities to operate their businesses – especially in providing goods and services to third parties – many of these activities should be considered eligible for research credits.

The following explores these circumstances, along with the high threshold of innovation requirements for capturing R&D tax credits. 
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The #1 Best Practice For Capturing R&D Tax Credits

Written by Darren Labrie. Updated May 19, 2016.
As your pharmaceutical company increases its research and development (R&D) activities to design and develop new or improved drugs, it’s critical to have a formal process in place to track your R&D expenses.

One of the most lucrative incentives for companies that invest in R&D activities is the federal and state R&D tax credit. However, without the proper internal controls and procedures in place, documenting and maximizing these credits is challenging.

Where To Begin Your R&D Tax Credit Journey

Before you start evaluating your R&D activities, you must first fully understand the unique facts and circumstances of your research. At the outset of any research project, it’s important to map out your current accounting procedures that track potentially qualified research expenses.

Some pharmaceutical companies use formal project accounting, while others track expenses by cost center or departments. Based on these findings, a customized approach to capture qualified research expenses can yield good results and make the process of handling the workflow much more manageable.

With the right process in place, you reduce internal staff hours as well as the R&D service provider costs needed to document and calculate these tax credits.

Are You Waiting Until The Fiscal Year Ends?

It’s not uncommon for a company to rush an R&D tax credit evaluation, where internal accounting personnel are under significant time constraints and manpower to properly analyze costs.

Frequently, pharmaceutical companies wait until their fiscal year ends to even consider evaluating and documenting their qualified research expenses. This approach yields inconsistent and inadequate results that do not meet the IRS’s recordkeeping requirements to sustain the R&D tax credits.

Do not wait until the end of the year to review R&D activities and expenses. You want to set up procedures at the beginning of the year to regularly track, monitor and organize your types of R&D activities and costs  that meet the tax credit’s eligibility requirements.

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Drug Discovery And Development: How R&D Tax Credits Support Innovation

Written by Darren Labrie. Updated Mar 31, 2016.
The R&D tax credit is tailor-made for the pharmaceutical industry since substantial research and experimentation activities are needed to successfully introduce pharmaceutical drugs to the consumer.

Although the R&D tax credit was created for industries like the pharmaceutical industry, especially in drug discovery and development, many pharmaceutical companies still aren’t taking advantage of this business incentive. 
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Tax Incentives For Long-Term And Post-Acute Care Providers

Written by Darren Labrie. Updated Mar 10, 2016.

As the need for assisted living facilities is on the rise, the challenge with healthcare financial management is budgeting while also investing in growth. There’s a delicate balance you must strike between reducing costs and making investments to maintain your health system’s competitive edge and provide outstanding patient care.

To relieve your financial worries and take control of future growth, tax incentives free up money to invest back into your long-term care facilities. 

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4 Mistakes You Must Avoid When Capturing Green Building Incentives

Written by Darren Labrie. Updated Mar 3, 2016.

There’s no refuting it: Green building incentives are on the rise. As more programs are offered to incentivize businesses to become more energy efficient, the time is ripe for taking advantage of these tax benefit programs.

To truly maximize your green building tax benefit with minimal obstacles along the way, you definitely do not want to launch into claiming these benefits without establishing a proper process. Too often business either don’t capture as many benefits as they could, or worse, are audited due to unsubstantiated claims.

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