CORE SOLUTIONS GROUP: TAX RECOVERY SPECIALISTS

DETAILED ENGINEERING APPROACH
Our team approaches every Cost Segregation Study under the “Detailed Engineering” method specified by the IRS. The IRS states: “The Detailed Engineering approach uses costs from contemporaneous construction and accounting records. Construction-based documentation, such as blueprints, specifications, contracts, job reports, change orders, payment requests, and invoices are used to determine unit costs.” IRS Publication Relative to Cost Segregation Studies the IRS states: “The primary issue is the proper classification of assets as either Sec 1245 or Sec 1250 property.” Additionally, the IRS has addressed and identified the credentials for anyone undertaking a supportable or defensible Cost Segregation Study: “The study is performed by “qualified” individuals or firms, such as those employing personnel competent in design, construction, auditing, and estimating procedures relating to building construction.” (PLR 7941002).

THE PROCESS:

• Provide a no cost property review or feasibility report to determine the
  cash flow benefits.
• Evaluation of current tax status and future business plans with CPA to determine if
  a study will be a benefit.
• Review of the project’s/facility’s construction cost by component or systems.
• On site visit of the facility/project to document the systems and components
  to determine how they’re utilized. Site photos are always taken.
• A detailed engineering review of assets including special purpose mechanical,
  electrical and plumbing, decorative finishes, site improvements and special purpose
  construction. As well as, Blueprints, AIA documents, and change orders.
• Classification of each building component into the appropriate tax life
  as prescribed by the IRS guidelines and relative case law.
• Finally, CORE delivers a 110-page written report with an executive summary,
  asset detail supporting the reclassified cost, specific case law and revenue rulings,
  depreciation schedules and all of the necessary tax forms.

THE R&D TAX CREDIT OPPORTUNITY:

• A hidden and immediate source of cash for many small and mid-size companies;
• A significant reduction to current and future year’s federal and state tax liabilities;
• Over $5 Billion in federal R&D tax credit benefits are given out annually;
• Approximately 80% of the $5 Billion goes to a few of the nation's largest companies;
• Every successful company is potentially eligible for an R&D tax credit of some amount
  many companies are unaware their day-to-day operations can qualify for the R&D Credit;
• The 20% research tax credit is not a deduction. It is an actual dollar-for-dollar credit
  against taxes owed or taxes paid. Plus the taxpayer may be able to expense all such
  costs in the year incurred;
• A business can take the credit for all open tax years - generally the last three, or four
  years plus the current year;
• Additional years may be available if taxpayer is in a net operating loss or alternative
  minimum tax position;
• Tax credits may carry forward 20 years;

1. Easier for a broader array of companies to qualify their activities as R&D
2. They provide greater flexibility in certain record keeping requirements
3. They significantly expand the definition of internal-use software characteristics

What Qualifies as R&D? Many taxpayers tend to regard “R&D” as an activity associated solely with
high-tech, biotech and pharmaceutical type companies. We have found many of our clients tend to regard their own efforts to make new, lighter, stronger, less expensive, more reliable products, or to make more precise, more economical and more versatile processes as “just doing my job,” when in fact they have been performing R&D qualifying activities all along.

If your Company is involved in any of the following activities, you may be able to claim the
R&D tax credit:

• Manufacture products
• Developing new, improved, or more reliable products / processes / formulas
• Developing prototypes or models (including computer generated models)
• Designing tools, jigs, molds, and dies
• Developing or apply for patents
• Certification testing
• Applying for patents
• Testing new concepts
• Development of new technology
• Trying new materials
• Adding new equipment
• Environmental testing
• Developing or improving production / manufacturing processes
• Developing, implementing or upgrading systems and / or software
• Developing production control software
• Improving or building new manufacturing facilities
• Automate internal processes
• Paying outside consultants / contractors to do any of the above stated activities

Why we are different?

PROCESS:
CORE utilizes a comprehensive approach in both quantifying and qualifying credit amounts,
which is the recommended approach by IRS (Project by Project approach). Thus, for example,
instead of identifying and documenting only 3-5 of the biggest projects conducted by a client
in prior year, CORE identifies EVERY qualifying activity and ties it too every employee, time and
wages and the corresponding sections of the code and appropriate legal documentation that
substantiates the credit.

STAFF:
CORE has Engineers, Tax and IP Attorneys, from a variety of disciplines who have extensive
experience on performing R&D studies of various industries. The result is that we can
maximize the credits and most importantly defend the credits. As the IRS Agents reviewing
the R&D Credit are also engineers, it is critical that the client has experienced engineers on
their side to defend the credit.

PRICING:
CORE charges a contingent-based fee depending upon size and scope of project. We would
provide you or your client with a free consultation and feasibility report to determine the cash
benefit before moving forward.

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