Why machine shops qualify
The four-part testNew parts count as R&D
A part or process only has to be new to your shop to count. It does not need to be new to the industry.
Every new part has unknowns
Can you hold the tolerance in that material at a price that works? Answering that is qualified work.
First articles are experimentation
Setup trials, scrapped parts, and revised programs satisfy the experimentation test. Your shop runs on it.
The science is already there
Your work rests on mechanical engineering and materials science. For machinists, the science test is the easy part.
A short study shows which of your jobs qualify, and proves it. Read the four-part test in the words of the statute.
What qualifies in practice
Work your shop already does- CAM programmingDeveloping toolpaths and strategies for a new geometry is development work, not setup.
- Fixture and workholding designDesigning a fixture to hold a difficult part through every operation is qualified engineering.
- First article and PPAPRunning, measuring, and revising a first article until it passes is the experimentation test at work.
- Tolerance and finish trialsTrialing speeds, feeds, tooling, and coolant to hold a tight tolerance or finish is experimentation on the record.
- Material developmentWorking out how to cut a new alloy, plastic, or composite without failure is technical iteration.
- Process improvementReducing cycle time or scrap on a running part through trial changes is qualified process work.
- Prototype machiningBuilding prototypes for a customer's design and solving what does not work counts.
- Automation and multi-axisBringing a part onto a new machine, robot cell, or five-axis setup raises questions solved by trial.
Where the credit comes from
The expenses that countShop wages
The time your programmers, machinists, and quality staff spend on new parts is the largest piece for most shops.
Scrap and trial material
Stock, tooling, and inserts consumed in first articles and setup trials can count as supplies.
Outside services
A share of what you pay U.S. heat treaters, coaters, and design consultants on qualified work counts too.
What does not count
Repeat runs of a proven part, machine purchases, and shipping stay out. The study draws that line honestly.
Common questions
We make parts to the customer's print. Is that research?
The print says what the part is. Working out how to make it, hold it, and pass inspection is the research your shop does.
Do scrapped first articles count?
Yes. Scrap from a first article or a setup trial is evidence of experimentation, and the material can count as a supply.
Does the credit cover new machines?
No. Equipment is depreciated, not expensed as research. The time and material spent proving out a process on the new machine can count.
We are a job shop with no engineering department. Do we qualify?
Yes. The credit follows the activity, not the title. A machinist proving out a new part is doing qualified work.
How far back can we claim?
Up to three prior tax years, by amended return. Credits you never claimed are still there to collect.
What records do we need?
The ones you already keep. CAM programs, setup sheets, inspection reports, scrap logs, and job costing are the evidence. The study organizes them against the test.
What happens if the return is examined?
The people who wrote the study answer for it. Audit defense is included in every study at no added cost.
Which form does the credit go on?
Form 6765, filed with the return. From there it carries onto Form 3800 as part of the general business credit. The Form 6765 guide and the Form 3800 guide walk a CPA through both.
Thirty minutes shows whether you qualify.
Book a call and bring the person who knows the work. We will cover whether your projects qualify and what a credit could be worth.
Book a call Or write to inquiries@thefoundryfirm.com