Fermenting Up Tax Savings with Federal and State R&D Tax Credits

Wine making done right involves both art and science.  Yet, most wine makers overlook a tax-saving opportunity that is more commonly associated with manufacturing and tech companies.

The Federal Research & Development (R&D) tax credit provides a federal tax credit based on certain expenditures for “qualifying research activities.”  (Additional incentives are available for certain startups and smaller wineries, such as credit against certain payroll taxes and not being limited by the alternative minimum tax.)

‍

The Sweet Science of Vinification

That phrase “Qualified Research Activities” is the heart of the argument for wineries claiming these expenditures. Costs related to an activity that meets the four-part test may qualify for the R&D credit, regardless of the industry in which the business operates.

Examples of R&D vinification activities for Wineries include, but are not limited to:

• Development of state of the art wine caves
• Developing unique software that can identify chemical compounds of the wine, tailor blends and maintain records
• Developing wine testing equipment for wine analysis
• Developing software, models, or algorithms to analyze grape maturation
• Development of automated grape picking machines
• Developing gene culture techniques, processes and related software to achieve optimal grape make-up
• Development of new yeast formulae and processes
• Creating processes to reduce toxins in wine
• Developing wine to have more health benefits
• Creating processes and products to avoid and/or limit spoilage
• Utilizing microwave technology to reduce level of organisms that can lead to spoiling without altering taste
• Creating ways to dispense wine without damaging the cork
• Evaluating soil, water availability and ground slopes to develop the optimal grape cultivation
• Improving processes related to soil and rootstock
• Developing new or improved product formulations
• Experimenting with new combinations of ingredients for a deeper, lighter, sweeter, more sparkling, drier taste, etc.
• Developing flavor or aroma profiles
• Developing new or improved ingredient mixing methodologies
• Developing new or improved product prototype batches
• Developing new or improved quality assurance testing processes
• Developing new or improved preservative chemicals

‍

Fermenting Your Credit

‍

Over thirty states also offer these tax incentives for wineries.  Because claiming federal and state credits and incentives requires detail analysis and documentation, Monetek will provide a team of experts with decades of experience helping businesses of all types and sizes, to decrease your tax liability.

We actively partner with businesses and their CPA firms to ensure effective utilization and maximum client satisfaction.