As electrical contractors work to improve energy efficiency in commercial buildings, they often find themselves in a position to potentially claim valuable tax deductions. These contractors install sophisticated lighting systems and may believe they qualify for substantial tax benefits under Section 179D of the Internal Revenue Code. However, misunderstanding the timing requirements or the criteria for being “primarily responsible for design” can lead to denied deductions and disputes with the IRS. When exactly is energy-efficient property considered “placed in service” for tax purposes? What does it mean for a contractor to be “primarily responsible” for designing energy-efficient systems in government…
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When Is Government-Contracted Research “Funded” for Tax Credit Purposes?
Many government contractors engage in sophisticated research and development activities that push the boundaries of science and technology. These contractors rightfully wonder whether they can claim valuable research tax credits for this work. The answer hinges on a critical question: Is the research considered “funded” by the government under the tax code? If it is, those expenses don’t qualify for the research tax credit, potentially leaving millions of dollars in tax savings unclaimed. A recent Court of Federal Claims case, Dynetics, Inc. and Subsidiaries v. United States, 121 Fed.Cl. 492, provides an opportunity to consider when government contractors can claim…
