PRAGER METIS CPAS LLC

Transcription

1 Lower Your Effective Tax Rate and Increase Your Company s Cash Flow through Federal Tax Credits & Incentives Presented By Andrea Fantozzi, Partner and Director of the Italian Desk in the International Department and Peter J. Scalise, Federal Tax Credits & Incentives Practice Leader for the Americas

2 Presentation Outline Tax Effect Your Business Costs through Tax Credits and Incentives R&D Tax Incentives Comprehensive Fixed Asset Analysis incorporating Construction Tax Planning Cost Segregation Analysis Work Opportunity Tax Credits Q&A 2

3 Foreign Direct Investment into the United States with Opportunities for Tax Incentives The Critical Role of Foreign Direct Investment in Driving Innovation and Growth for the United States and the Global Economy Get Rewarded for Your Efforts and incorporate Federal Tax Incentives to Tax Effect Your Costs of Your Investment into the United States 3

4 Lower Your Effective Tax Rate and Increase Your Company s Cash Flow through Federal Tax Credits & Incentives Many Business Tax Incentives are available including, but not limited to: R&D Tax Credits Orphan Drug Tax Credits Energy Tax Incentives Accelerated Depreciation Deductions through Construction Tax Planning and Cost Segregation Analysis Preservation Tax Incentives including both the Historic Tax Credit and the Rehabilitation Tax Credit The New Markets Tax Credit Program The Work Opportunity Tax Credit Program 4

5 Introduction R&D Tax Incentives are available for qualified research and development activities conducted: 5 Globally (over 100 countries currently offer an incentive) U.S. Federal Level U.S. Multi-State Levels (over 40 states currently offer an incentive) Substantiation of R&D Tax Incentives requires both credible testimony and contemporaneous documentation

6 Overview of the Federal-Level R&D Tax Credit Program 6 The Federal-Level Research Tax Credit Program was initially introduced into the Internal Revenue Code in 1981 as a temporary provision through the Economic Recovery Tax Act of 1981 to encourage job growth and investment within the United States and its territories (e.g., U.S. Virgin Islands, Puerto Rico, Guam, etc.) The Federal-Level Research Tax Credit Program has been made permanent by the Protecting Americans from Tax Hikes Act of 2015 (hereinafter the PATH Act )

7 Overview of the Federal-Level R&D Tax Credit Program (cont.) 7 The Enhanced R&D Tax Credit Program under the PATH Act Provides a True Path to Significant Tax Savings for Small Businesses to: Allow eligible Small Businesses (i.e., $50 million or less in gross receipts) to claim the credit against the Alternative Minimum Tax (hereinafter "AMT") for tax years beginning after December 31, 2015; and Allow eligible Start-Up Companies (i.e., those with less than $5 million in gross receipts and earning revenue for less than 5 years) to claim up to $250,000 of the credit against the company s federal payroll tax for tax years beginning after December 31, 2015

8 R&D Tax Incentives R&D Tax Incentives can apply to virtually any industry including, but are not limited to: 8 Life Sciences (e.g., Pharmaceuticals, Bio-Technology, Medical Devices, etc.) Food Science and Bio-Flavoring Aerospace & Defense Software & Electronics Energy & Chemical Companies Financial Services (e.g., for both 3 rd party sale, lease or license software and internal use software) Automotive and Transportation

9 R&D Tax Incentives Identifying, Gathering, and Documenting Qualified Research Activities (QRAs) in connection to: 9 New Product Development and/or Manufacturing Process Improvements Requires the substantiation of the subsequent four criteria as set forth pursuant to I.R.C. 41(d) and Treas. Reg

10 R&D Tax Incentives 10

11 R&D Tax Incentives Quantitative Computation of Qualified Research Expenditures (QREs) include: 11 Wages Supplies Third Party Contract Research

12 R&D Tax Incentives 12 Tax Effect Your Company's New Product Development & Manufacturing Process Improvement Costs with R&D Tax Incentives both Internally and Externally! Internal & External Cost Reductions: We successfully work with Life Sciences companies to reduce internal budgets for new Pharmaceutical Product Development Pipelines through projecting their R&D Tax Credit benefits against Yearly R&D Budgeted Costs We secured over 100 million in R&D Tax Credits in the aggregate for Life Sciences companies of all sizes ranging from Start-Ups to Fortune 100 companies

13 R&D Tax Incentives: Client Case Studies $ 85M Aerospace & Defense Company with 3 locations We secured a $ 450K R&D Tax Credit for their New Product Development and Manufacturing Process Improvements for their research and design work on flight actuation systems and gyroscopes Start-Up Software Company with 1 location No Revenue We secured a $ 125K R&D Tax Credit to be applied against Federal Payroll Taxes 13

14 Cost Segregation Analysis & Construction Tax Planning A Cost Segregation analysis will methodically review property, plant and equipment to accelerate depreciation deductions resulting in reductions in tax liabilities This is accomplished by properly reclassifying real property (e.g., property that is generally depreciated for tax return purposes over a period of either 27.5 years in the case of commercial residential apartment buildings or 39 years in the case of commercial office buildings) into personal property (e.g., property that is generally depreciated for tax return purposes over a period of either 3, 5, or 7 years) Moreover, land improvements are analyzed (e.g., property that is generally depreciated for tax return purposes over a period of 15 years) to further accelerate depreciation deductions 14

15 Cost Segregation Analysis & Construction Tax Planning Construction Tax Planning is the pre-design / pre-architectural phase of a fixed asset analysis which often times secures the greatest benefits This is accomplished through the recommendation of select materials and supplies to be utilized in the Construction Phase to ensure that the structural components will be classified as personal property as opposed to real property Example: Requesting a design-build contractor to utilize modular internal walls to bifurcate office and / or conference room space in a commercial office building as opposed to permanently affixing these said internal walls to bifurcate office and / or conference room space within the floor configuration layout will enable the said structural components to be classified as personal property with a 5 year depreciable class life as opposed to real property with a 39 year depreciable class life. 15

16 Fixed Asset Client Case Studies $ 250M Real Estate Purchase of an Office Campus Complex We secured over $ 80M in accelerated component depreciation deductions $ 55M Real Estate Purchase of a Multi-Use Building We secured over $ 15M in accelerated component depreciation deductions 16

17 Work Opportunity Tax Credit Program 17

18 Work Opportunity Tax Credit Program 18

19 Work Opportunity Tax Credit Program NYC Based Security Firm with Dozens of Qualified Employees We secured over one Hundred Thousand of tax credits for new hires from the aforementioned targeted groups Fast Food Retail Chain with Dozens of Qualified Employees We secured tens of thousands of tax credits for new hires from the aforementioned targeted groups 19

20 Q&A Session 20

21 Andrea Fantozzi, CPA, CGMA, CM&AA, Partner and Italian Desk Leader Contact Information T: , X279 F: Prager Metis CPAs, LLC 14 Penn Plaza, 18 th floor New York, NY Practice Areas International Services Audit & Accounting Services Advisory Services Industry Expertise Entrepreneurial Food & Hospitality Manufacturing & Distribution Packaging & Logistic Professional Services Real Estate Retail & Consumer Products E-Commerce High-Net-Worth Specialty Audit, Review and Compilation Bookkeeping, Budgeting Specialized Attest Engagements Financial Due Diligence Business Management Inbound Planning and Compliance Professional Experience Andrea Fantozzi is a Partner and Director of the Italian Desk in the International Department of Prager Metis CPAs, LLC, a member of Prager Metis International Group. Mr. Fantozzi has over ten years of experience in providing accounting, audit, due diligence, and financial advisory to national and international medium-sized firms in several industries, such as manufacturing and distribution, e-commerce, textile, luxury retail, digital communication, logistics and financial services. Mr. Fantozzi offers financial and business strategy consultancy to European firms entering the U.S. market and to U.S. firms interested in expanding their business in Europe. Thanks to his ability to understand his clients needs, he truly creates an atmosphere of mutual trust and productive cooperation through a combination of knowledge, confidence, and trust. Professional Affiliations American Institute of Certified Public Accountants New York State Society of Certified Public Accountants Alliance of Merger & Acquisition Advisors (AM&AA) Canova Club of Milan, Italy Visiting Professor at the University of Turin, Business Management School Education M.S. Banking and Business, University of Political Science of Macerata (MC), Italy Graduate Courses in Taxation and Accounting, Fordham University, New York 2016 Certified Merger & Acquisition Advisor Credentialing Program, Thunderbird Center for Global Entrepreneurship Glendale, AZ

22 Peter J. Scalise, Managing Director and Federal Tax Credits & Incentives Practice Leader Contact Information T: , X272 F: Prager Metis CPAs, LLC 14 Penn Plaza, 18 th floor New York, NY Practice Areas Federal Tax Incentives Multi-State Tax Incentives Federal & Multi-State Tax Controversy Industry Expertise Aerospace & Defense Food Science & Bio-Flavoring Manufacturing & Distribution Banking & Securities Real Estate Retail & Consumer Products Technology Start-Ups & Small Business Specialty R&D Tax Incentives Orphan Drug Tax Incentives Construction Tax Planning Cost Segregation Analysis Energy Benchmarking & Energy Tax Incentives Work Opportunity Tax Credits Professional Experience Peter J. Scalise is a Managing Director and the Federal Tax Credits & Incentives Practice Leader for Prager Metis Business Advisors, LLC, an affiliate of the Prager Metis International Group. Mr. Scalise is a highly distinguished BIG 4 Alumni Tax Practice Leader and has approximately twenty five years of progressive CPA Firm experience developing, managing and leading multi-million dollar tax advisory practices on a regional, national, and global level. Mr. Scalise is a highly acclaimed thought leader in the fields of accounting and taxation with deep subject matter expertise in connection to designing, implementing and defending sustainable methodologies for specialty tax incentives including, but not limited to, R&D tax incentives; orphan drug credits; therapeutic discovery credits; accounting methods and periods planning; energy tax incentives in connection to green building envelope efficiency and benchmarking, solar energy, bio energies, fuel cells, wind turbines, micro turbines, and geothermal systems; and comprehensive fixed asset analysis incorporating principles of construction tax planning, cost segregation analysis and the final treasury regulations governing tangible property. Professional Affiliations American Institute of Certified Public Accountants, Real Estate & Construction Conference Keynote Speaker New York State Society of Certified Public Accountants, Annual Conference Keynote Speaker American Society of Tax Professionals (ASTP), Member of the Board of Directors and Board of Editors The Northeastern Region Tax Roundtable, a division of ASTP, Founding President and Chairman The Washington National Tax Roundtable, a division of ASTP, Founding President and Chairman TaxConnections, Tax Faculty Member and Contributing Tax Journalist Parker Tax Publishing, Contributing Tax Journalist CPAacademy, Tax Faculty Member Education Master of Science, Taxation, Pace University, New York Bachelor of Science, Accounting, Hunter College, New York

23 Thank You! Andrea Fantozzi, CPA, CGMA, CM&AA Partner and Italian Desk Lead Prager Metis CPAs, LLC 14 Penn Plaza 18 th floor New York, NY T: x279 Peter J. Scalise Federal Tax Credits & Incentives Practice Leader Prager Metis Business Advisors, LLC 14 Penn Plaza 18 th floor New York, NY T: x272 Prager Metis Prager Metis is a Top 100 accounting firm, with over 60 partners and principals, more than 400 team members, and 12 offices worldwide including North America, Europe, and Asia. Clients come to Prager Metis for the expert advice that protects and grows the value of their world whether that world is local or extends across international markets. Prager Metis - Your World. Worth More.