While craft brewing and research & development don’t instantly correlate, they are in fact as interrelated as any other research intensive industry.  As a result, many breweries are unaware that a majority of their innovations and improvements are eligible for the Research and Development Tax Credit.  The R&D credit allows taxpayers to convert everyday business expenses into much more favorable tax credits, subsequently increasing a company’s after tax cash flow.  Below are a list of some of the common activities that could qualify for the R&D Credit.

  • Development of new or improved product formulas including hop, yeast and barley varieties
  • Development of new or improved bottling or canning process
  • Development of new or improved bottle or can design
  • Development of new or improved fermentation process
  • Development of new or improvement brewing and bottling equipment
  • Innovations to improve product shelf life
  • Innovations to filtration and  preservation methodologies
  • Innovations to manufacturing process

While the R&D credit offers very favorable tax treatment, as such it can be subject to scrutiny from the IRS.  The key to successfully claiming the R&D credit is precise and accurate documentation of the activities performed.  If your company has any questions about the Research & Development credit, please contact the tax advisors at Stephano Slack, LLC.

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