Why mills qualify
The four-part testA new layup counts as R&D
A new layup or grade only has to be new to your mill to count. It does not need to be new to the industry.
Every new machine has unknowns
Will the new press hit spec at cycle time? Getting a machine to run right is qualified work, however long it takes.
Trial runs are experimentation
Trial panels and test loads through the dryer satisfy the experimentation test. Your normal commissioning is the evidence.
The science is already there
Wood, resin, heat, and pressure behave by physics and chemistry. For a mill, the science test is the easy part.
A short study shows which of your projects qualify, and proves it. Read the four-part test in the words of the statute.
What qualifies in practice
Work your plant already does- New layups and panel constructionsWorking out a ply configuration or grade your mill has not run before is qualified development.
- Glue line changesTrialing a new resin, spread rate, or assembly time to hold bond quality is experimentation on the record.
- Press cycle developmentFinding the time and temperature that cure a new panel without blows takes trial runs. Those runs count.
- Dryer schedulesSetting speeds and temperatures that bring a new species or thickness to target moisture without checking is qualified process work.
- Lathe and peeling setupsDialing knife angle and feed to hold veneer thickness on a new log mix is technical iteration.
- Commissioning new equipmentThe months spent getting a new lathe, dryer, press, or saw to run at rate are eligible time, however long it takes.
- Yield and recovery projectsChanging how you clip and patch veneer to pull more product from each log is qualified improvement.
- Controls and automationTuning scanners and control logic on the line so a new setup holds tolerance is documented problem solving.
Where the credit comes from
The expenses that countPlant wages
The time your plant manager, millwrights, operators, and quality staff spend on new processes and new equipment is the largest piece for most mills.
Trial material
Veneer and resin consumed in test runs and first-article panels can count as supplies.
Outside help
A share of what you pay U.S. equipment vendors and consultants to tune and troubleshoot a new line on site counts too.
What does not count
The equipment itself and repeat production on a proven setup stay out. The study draws that line honestly.
Common questions
Do equipment upgrades count?
The machine itself is depreciated, so it stays out. The material run through it in trials and the hours your people spend getting it to run right both count.
Is there a limit on the hours we spent getting a machine to work?
No. However long it took to get the machine running, the time your people put into it is eligible, and the rest of their work in those years is reviewed the same way.
We never tracked hours by project. How do you know who spent what?
The IRS accepts a reasonable estimate. Reasonable means asking the person who oversaw the work how much of a normal day went to it, then asking the people around them, until the shares hold up by role and by project.
Who counts besides the person running the project?
Anyone directly supporting or overseeing it. The plant manager and the hourly crew on a trial shift both count for the share of their time they gave it.
How far back can we claim?
Up to three prior tax years, by amended return. A few states allow four. A return filed on extension stays open three years from the date it was filed.
Does every state work the same way?
No. Most states run their own program on the federal framework, and some have none. The study prices the federal credit first and the state credit with it.
We are an S corporation that flows to a trust. Where does the credit land?
It passes through with the income to the owners' return, the same as the profit does. The study works the same way whatever the entity chain looks like.
We file on extension every September. Does that matter?
Only for which years are open. Each amended year has to be filed within three years of its original filing date, so the extended deadline is the one that counts for the oldest year.
What will you ask our office to pull?
W-2s, the tax returns, any 1099s to outside contractors, and a job costing report exported to a spreadsheet. The rest comes from interviews on the plant floor.
How much of our people's time will the study take?
Two to three hours of interviews in total, or one day on site where each person spends twenty to thirty minutes with us and goes back to the line.
Should we build a project list before you look?
Start with the financials. Once the numbers show what a credit could be worth, the project list is short and the interviews fill it in.
Does it get easier after the first year?
Yes. The first study builds the base years. After that, each year only needs the newest payroll and project data.
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