Page 23 - Beverage Master February March 2020

Craft Beverage

3) Hops boiling – once the mash is sparged, the fied, your tax advisor calculates a federal and state
resultant wort is sent to a hops boiler where R&D credit. In this case, the brewer will generate
hops are added for flavor and boiled according a federal credit of $10k and a Texas state credit of
to a recipe hops schedule. $6k.

4) Fermenting – the wort is sent to a fermentor As can be seen from the case study above, the
where the sugars undergo fermentation, via the R&D credit can be a valuable tool for craft brewers
glycolysis which causes a chemical reaction. to help offset startup or other operational costs,
either in the way of credits to offset tax liability or
Who might be involved in the process: refundable payroll tax credits in certain cases.

1) Head R&D Brewer While it may not be readily apparent that the R&D
credits are in-play for the craft brew industry, many
2) R&D Brewery Manager craft brewers have taken advantage of this oppor-
tunity. Craft brewers should take notice of the
3) Production Manager activities that they engage in and consider whether
R&D credits might be an option.
4) Assistant R&D Brewer

5) Brewery Quality Control/Lab

The brewer in this case provides their tax advisor
with a W-2 box 1 wage listing and supply expenses
for the current and previous three years, and had
no contractors that assisted with the development
process. Your tax advisor conducts technical inter-
views with the employees below to help identify
the qualifying activities and to allocate a percent-
age of time to each qualifying activity:

Assumptions:

• Head R&D Brewer’s time qualifies at 100%

• R&D Brewery Manager time qualifies at
100%

• Production Manager’s time qualifies at 50%

• Assistant R&D Brewer’s time qualifies at
100%

• Brewery Quality Control/Lab’s time qualifies
at 100%

Qualified supply expenses by year:

• 2018: $60,000
• 2017: $50,000
• 2016: $50,000
• 2015: $40,000

Once the data is gathered, analyzed and quanti-

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