Industry Brief  ·  Electronics Manufacturing

Every board is a prototype.

The federal R&D tax credit pays for the design and process work behind every new board. Most electronics makers 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 board, process, or product your company 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 company

Work you already do on new products
  • Circuit and board designDeveloping a schematic and layout that meets the performance spec.
  • Firmware and embedded codeWriting and testing the code that makes the hardware work.
  • Prototype buildsBuilding the first article, finding what fails, and revising the design.
  • Compliance testingGetting a design through EMI, safety, or environmental testing.
  • Process developmentWorking out the assembly process, reflow profile, or test fixture for a new board.
  • Building to yieldFiguring out how to build a customer's design repeatably and at yield.
  • Component substitutionReplacing an obsolete or scarce part and requalifying the design.
  • Enclosure and thermal designManaging heat, fit, and durability in a new product.

The four questions, for electronics makers

§41's four-part test
  1. Did you design or build something new to your company?It doesn't have to be new to the industry.
  2. Did it take real know-how?Your work rests on electrical engineering, physics, and code.
  3. Were you unsure at the start?Will it meet the spec? Will it survive the field?
  4. Did you try options to find out?Prototype runs, test failures, and revised layouts are exactly that.

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

Electronics makers ask

We build other companies' designs. Do we qualify?

Often, for the process work you own: the assembly method, fixtures, and test for a new board. Work stays out if the customer pays you whether or not it works, or if you keep no rights to what you learned, so the study reviews the contract.

Does firmware count?

Yes. Firmware and embedded code developed and tested for your hardware counts as software development.

Do failed prototype runs count?

Often. A pilot run that didn't yield, before production, shows you experimented. The boards and components used up in it can count as supplies.

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
Manufacturing

Every new line has a rough first month.

New products, new lines, and process changes can be development work the credit rewards.

Read the brief Machine Shops

Your first articles can be research.

First articles, fixtures, and CAM programs for hard new parts can be process research.

Read the brief Metal Fabrication

Your weld procedures are research.

New weld procedures, fixtures, and first articles can be process research that qualifies.

Read the brief

Give us thirty minutes.

Bring whoever runs bring-up on your new boards. You'll leave knowing whether your products qualify.

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