ENGINEERING STUDY

Engineering Focused Studies

In order to satisfy new IRS compliance regulations that call for stricter technical requirements, Pinnacle delivers one of the industry’s most thorough and detailed engineering studies. Our engineering reports are prepared by our experienced team of engineers and costing specialists to ensure your claim is compliant with the new rules and well documented.

Our comprehensive approach to preparing RTC claims guarantees that you will earn your maximum allowable credits with minimum business interruption and scrutiny.
 

IRS Mandates Nexus

Effective on all 2008 tax returns, the IRS no longer accepts claims that were typically calculated using traditional methods such as wage cost centers (percentage of each department) or technical sampling (sample of eligible projects).
IRS Explains Nexus

The IRS will only accept Nexus. Anything short of using Nexus to calculate your research credit will result in a rejected claim or significantly reduced Qualified Research Expenditures. This will result in lower refunds and higher scrutiny. What method is your company or CPA using to calculate your credit?


Pinnacle Uses Nexus

Pinnacle has been using the Nexus Methodology long before stricter IRS standards were passed in 2007. Many companies are currently being challenged in IRS audit to demonstrate and support their RTC claim using Nexus. To demonstrate Nexus, it requires engineering know-how. Accountants do not have the technical qualifications to prepare Nexus.

For companies that are non-compliant, it is a costly and time consuming exercise to go back and recreate a study using Nexus. Many companies settle for a drastically reduced refund. Pinnacle Can Help


NEXUS

What is Nexus?

The IRS wants to see a relationship between Qualified Research Expenses (QREs) and Qualified Research Activities (QRAs) which meet the statutory requirements under Section 41. Nexus is a comprehensive Project by Project approach that:
  1. identifies and supports eligible activities;
  2. includes time spent on performing those activities;
  3. identifies who performed those activities;
  4. incorporates W2 costs of those performing those activities.
Typically, many companies and CPA firms have claimed this credit using cost center accounting by taking a percentage of each department or a hybrid method that combines Project and Cost Center methods. If you use these methods without providing the Nexus between qualified activities and their related costs, your claim will be rejected or drastically reduced. According to the IRS, the nexus problem is the inability to connect specific research projects and the underlying activities to qualified expenses.

Click HERE to read what the IRS says about Nexus.