AndreTaxCo, PLLC

AGRICULTURAL INDUSTRIES

 

Many agricultural businesses are often unaware of whether they qualify for certain government tax incentive programs, or they may believe that such programs do not apply to agricultural companies. Even those that are aware often fail to capture the full extent of tax credits to which they are entitled.

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For example, many taxpayers mistakenly believe you must have a PhD or laboratory scientists performing qualified research activities to claim the R&D tax credit under the U.S. tax code. However, this is not true. If your business has produced new and/or improved products and/or processes concerning enhanced agricultural products, formulations, harvest processes to increase yields, reduce costs (e.g. chemical or fertilizer waste), or other improvements to the efficiency of your operation, or adhere to government regulations (OSHA, FDA, EPA standards, etc.) there may be an opportunity your company could benefit from an R&D Tax Credit study.

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Below outlines various federal tax incentives which may be applicable to your agriculture operations as a cash saving benefit and/or refund opportunity. If any of these credits appear relevant to your business, let AndreTaxCo help you claim the credits that you deserve!

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Research and Development Credits 

• Research Credit (Form 6765) under IRC § 41(a) 

  • See also State R&D Credits for additional benefit opportunities.

  • University Basic Research Credit

  • "Start-up" Payroll Tax R&D Credit Offset

  • Agriculture Industry – Qualifying Research Activities Examples​

    • Feed Mills​

    • Wineries, Breweries, and Distillers

    • Food Manufacturing

    • Manufacturing

    • Distribution & Logistics

    • Chemical Engineering

    • Plastic Rubbers

    • Advanced Materials

    • Electronics / Robotics / Machinery

    • Software Development

    • Biotechnology

    • Other Industry Activities

  • Cannabis Industry Insights (*subject to additional investigation)

    • ​​Cannabis Companies Tax Incentives 

      • Non-Plant Touching Cannabis Services  – Qualifying Research Activities Examples​

      • Cannabis State Tax Conformity

      • Cannabis State R&D Tax Credits 

        • Cannabis State R&D Tax Credit – Qualifying Research Activities Examples​ 

    • Hemp Companies Tax Incentives​

      • Industrial Hemp & Derivatives – Qualifying Research Activities Examples​

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Hiring Credits & Incentives

• Work Opportunity Credit (Form 5884) under IRC § 51(a) 

• Differential Wage Payment Credit (Form 8932) determined under IRC § 45P(a)

• Indian Employment Credit (Form 8845) as determined under IRC § 45A(a) 

• Empowerment Zone Employment Credit (Form 8844) determined under IRC § 1396(a) 

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Alternative Fuel / Vehicle Industry Credits

• Low Sulfur Diesel Fuel Production Credit (Form 8896) determined under IRC § 45H(a) 

• Carbon Dioxide Sequestration Credit (Form 8933) determined under IRC § 45Q(a)​ 

• Alternative Fuel Vehicle Refueling Property Credit (Form 8911) to which IRC § 30C(d)(1) applies

• Alternative Motor Vehicle Credit (Form 8910) to which IRC § 30B(g)(1) applies 

• Biodiesel Fuels Credit (Form 8864) determined under IRC § 40A(a) 

• Second Generation Biofuel Producer Credit (Form 6478) (fka “cellulosic biofuel producer credit”) (IRC § 40(b)(6)) 

• Qualified Plug-in Electric Drive Motor Vehicle Credit (Form 8936) to which IRC § 30D(c)(1) applies 

• Excise tax credits for alternative fuel and alternative fuel mixtures (Form 4136) (IRC §§ 6426(d) and (e), and 6427(e)) 

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Alcohol Industry Credits

• Distilled Spirits Credit (Form 8906) determined under IRC § 5011(a) 

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Low-Income / Targeted Geographical Zone Credits

• Low-Income Housing Credit (Form 8586) under IRC § 42(a)

• New Markets Tax Credit (Form 8874) determined under IRC § 45D(a) 

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Building Renovation & Modification (Disability Access) Credit & Incentives

• Rehabilitation Credit (IRC § 47) – renovation of qualified rehabilitation building(s) (e.g. historical properties) credit

• Disabled Access Credit (Form 8826) under IRC § 44(a) in the case of an eligible small business (as defined in IRC § 44(b)) 

  • ​See also "Barrier Removal Tax Deduction" pursuant to IRC § 190

    • ​The Architectural Barrier Removal Tax Deduction encourages businesses of any size to remove architectural and transportation barriers to the mobility of persons with disabilities and the elderly. Businesses may claim a deduction of up to $15,000 a year for qualified expenses for items that normally must be capitalized.

    • Businesses claim the deduction by listing it as a separate expense on their income tax return. Also, businesses may use the Disabled Tax Credit and the architectural/transportation tax deduction together in the same tax year, if the expenses meet the requirements of both sections.

    • To use both, the deduction is equal to the difference between the total expenditures and the amount of the credit claimed.

    • See IRS Publication 535 (2018); 26 U.S. Code § 190 (expenditures to remove architectural and transportation barriers to the handicapped and elderly).

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Business Benefit Plan Credits

• Small Employer Health Insurance Credit (Form 8941) determined under IRC § 45R – For tax years beginning after 2013, the credit is only available for a 2-consecutive-tax-year credit period.

• Paid Family and Medical Leave Credit (Form 8994) determined under IRC § 45S(a) in the case of an eligible employer (as defined in IRC § 45S(c)) 

• Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips (Form 8846) determined under IRC § 45B(a) 

• Credit for Small Employer Pension Plan Startup Costs (Form 8881) determined under IRC § 45E(a) in the case of an eligible employer (as defined in IRC § 45E(c)) – up to $5,000 per year for up to three years ($15,000 cap)

• Credit for Employer-Provided Childcare Facilities and Services (Form 8882) determined under IRC § 45F(a) 

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Railroad Industry Credits​

• Railroad Track Maintenance Credit (Form 8900) determined under IRC § 45G(a) 

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Note, many of these listed federal credit incentives have comparable state tax incentives that are often substantially similar to calculate or claim, subject to state specific procedural rules and regulations.

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