Industry Brief  ·  Boat Manufacturing

Every boat is a prototype.

The federal R&D tax credit pays for the development work that goes into each new model. Most specialty builders never claim it.

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It costs nothing to find out. If there isn't enough credit to be worth claiming, you don't pay a thing.

New to youis enough. A hull change or layout your shop hasn't built before can count when you had to test your way to it.
4 years of creditin one study: this year, plus past years still open to amend, usually three.
Exam supportcomes with every study. If the IRS asks, we answer.

What counts in your shop

Work you already do between hulls
  • Hull form changesReworking a running surface, strakes, or deadrise to fix how a boat rides.
  • Layup trialsChanging schedules, resins, or coring to hit strength and weight targets.
  • Propulsion packagesFitting a new engine, drive, or outboard package into an existing hull.
  • Sea trialsRunning a build, finding what's wrong, and fixing it on the next one.
  • Plugs and moldsDeveloping the tooling for a new or revised model.
  • Weight and stabilityMoving ballast, tanks, and structure to fix trim or stability.
  • Systems routingWorking out fuel, electrical, and hydraulic runs on a new model.
  • Semi-custom changesSolving a customer's functional change when it raised a real engineering unknown.

The four questions, for boat builders

§41's four-part test
  1. Did you build or change a model in a way new to your shop?Development hulls count. Once the model is ready to sell, the next ones off the line don't.
  2. Did it take real know-how?Your work rests on marine engineering and physics: hull shape, structure, stability.
  3. Were you unsure at the start?How will she ride with the new power? Will the layup hit the weight target?
  4. Did you try options to find out?Building one, sea trialing it, and refining the next is exactly that.

Unsure about any of these? That's what the call is for. The four-part test in plain English

Boat builders ask

The boat sold. Does it still count?

Yes. A development build can still count after it sells, if it was built to prove the design and the sale didn't pay you to do the research. Resin, glass, and coring used on it can count too.

We build semi-custom, not new models. Do we qualify?

Sometimes. A customer change counts when it raised a real engineering unknown. Fitting a known option does not. Color and upholstery don't, however long the customer took to pick them.

We don't keep engineering records. Is that a problem?

You keep more than you think. Build sheets, layup schedules, and sea trial notes are the evidence.

Filing, how far back, exams, and costs: common questions.

For your CPA: where the credit goes on Form 1120, 1120-S, 1065, or 1040.

Other industry briefs

Where else it lands
Automotive Aftermarket

Every build is a test.

New parts, upfits, and tunes worked out in your shop can be qualified development work.

Read the brief Electronics Manufacturing

Every board is a prototype.

Board design, firmware, and prototype bring-up can be development work that qualifies.

Read the brief Software Development

Your commits are research.

New features, architecture, and integrations with an uncertain outcome can qualify.

Read the brief

Give us thirty minutes.

Bring whoever runs your new builds and sea trials. You'll leave knowing whether your models qualify.

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