CASE STUDY
Unlocking R&D Tax Credits for a Precision CNC Manufacturer
Approach
A precision machining company serving the aerospace and defense industries specialized in custom CNC programming and short-run production of complex components with unique material requirements.
Though highly technical in nature, the business had never pursued the R&D Tax Credit, assuming it applied only to large tech or biotech firms (a common misconception). We worked directly with our client to conduct a qualified R&D study across several years of operations.
Findings
Eligibility Assessment and Project Mapping
We interviewed engineers and programmers to ID work involving technical uncertainty, iterative design, and custom part development. The company's core production process including iterative CNC programming and prototype machining - met the 4-part R&D test under IRS guidelines.
Qualified Cost Analysis
Align analyzed wages, consumables, and subcontractor costs tied to the company's qualified activities. Most qualifying R&D was performed by programmers, shop foremen, and design engineers, making a significant portion of their wages eligible.
Credit Calculation
We prepared and delivered a comprehensive technical narrative and financial summary, ready for IRS and state-level documentation requirements.
Financial Impact
Federal and State R&D Tax Credits:
$186k across 3 open tax years
Current-Year Credit:
$68k in direct tax savings used to reduce payroll tax liabilities
Additional Benefit:
Implemented a framework for qualifying projects to capture credits annually going forward
This engagement shifted the company's mindset from reactive compliance to proactive tax strategy - without disrupting operations or changing their core processes.