{"id":13428,"date":"2024-07-01T19:54:47","date_gmt":"2024-07-01T19:54:47","guid":{"rendered":"https:\/\/taxops.com\/?p=13428"},"modified":"2024-07-01T20:00:10","modified_gmt":"2024-07-01T20:00:10","slug":"iowas-computer-costs-treatment-on-rd-credits-and-documentation","status":"publish","type":"post","link":"https:\/\/taxops.com\/iowas-computer-costs-treatment-on-rd-credits-and-documentation\/","title":{"rendered":"Iowa\u2019s Computer Costs Treatment on R&amp;D Credits and Documentation"},"content":{"rendered":"\n<div style=\"height:60px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"536\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\" data-src=\"https:\/\/taxops.com\/wp-content\/uploads\/2024\/07\/Iowas-New-Computer-Costs-Treatment-on-RD-Credits-and-Documentation-1-1024x536.png\" alt=\"\" class=\"wp-image-13433 lazyload\" data-srcset=\"https:\/\/taxops.com\/wp-content\/uploads\/2024\/07\/Iowas-New-Computer-Costs-Treatment-on-RD-Credits-and-Documentation-1-1024x536.png 1024w, https:\/\/taxops.com\/wp-content\/uploads\/2024\/07\/Iowas-New-Computer-Costs-Treatment-on-RD-Credits-and-Documentation-1-980x513.png 980w, https:\/\/taxops.com\/wp-content\/uploads\/2024\/07\/Iowas-New-Computer-Costs-Treatment-on-RD-Credits-and-Documentation-1-480x251.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1024px, 100vw\" \/><noscript><img decoding=\"async\" width=\"1024\" height=\"536\" src=\"https:\/\/taxops.com\/wp-content\/uploads\/2024\/07\/Iowas-New-Computer-Costs-Treatment-on-RD-Credits-and-Documentation-1-1024x536.png\" alt=\"\" class=\"wp-image-13433 lazyload\" srcset=\"https:\/\/taxops.com\/wp-content\/uploads\/2024\/07\/Iowas-New-Computer-Costs-Treatment-on-RD-Credits-and-Documentation-1-1024x536.png 1024w, https:\/\/taxops.com\/wp-content\/uploads\/2024\/07\/Iowas-New-Computer-Costs-Treatment-on-RD-Credits-and-Documentation-1-980x513.png 980w, https:\/\/taxops.com\/wp-content\/uploads\/2024\/07\/Iowas-New-Computer-Costs-Treatment-on-RD-Credits-and-Documentation-1-480x251.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1024px, 100vw\" \/><\/noscript><\/figure>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><em>Cloud computing costs in Iowa are excluded in calculations for R&amp;D credits, but treatment of leased computing varies by state. Cloud computing costs are also an audit issue so, shore up documentation.<\/em><\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">By <a href=\"https:\/\/taxops.com\/jamie-overberg\/\" target=\"_blank\" rel=\"noopener\" title=\"Jamie Overberg\">Jamie Overberg<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The inclusion of cloud costs in the calculation of research and development (R&amp;D) credits varies by state. Iowa\u2019s latest changes on leased computer costs, effective January 1, 2023, serve as an example of how cloud expenses can impact R&amp;D calculations.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Iowa\u2019s new law eliminates expenses for the use of third-party computers in the conduct of qualified research under Internal Revenue Code section 41(b)(2)(A)(iii) from being considered as Iowa qualified research expenses.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Iowa employs a distinct approach to the research credit computation. While most states include only expenses incurred within their borders for the current year and the base, Iowa starts with federal qualified research expenditures (QREs) and credit.&nbsp; It then determines the portion that qualifies as Iowa QREs and calculates the credit accordingly. The recent change requires taxpayers to reduce their federal QREs by their leased computer costs, recompute their federal credit without these costs, and then allocation the revised credit to Iowa.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Why the Change<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Iowa faced issues around 2019 when it made its R&amp;D credit refundable. This coincided with Google opening a massive server farm in Council Bluffs and many companies shifting development, prototyping and testing platforms to the cloud.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This led to a surge in credit refunds, even for companies with losses. In response, Iowa began auditing aggressively and disallowing cloud costs. To address this, Iowa retained the refundable credit but excluded leased computer costs for the tax year 2023 to curb the flood of cash claims.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Shoring up Documentation<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The IRS is also making cloud computing costs an audit issue, making it prudent for taxpayers to shore up their leased computer costs documentation for both federal and state purposes. If you are including these costs in your credit, you can better validate your leased computer costs documentation by collecting:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Location<\/strong> of the leased computer services<\/li>\n\n\n\n<li><strong>Hosting type<\/strong>, whether hosted or shared<\/li>\n\n\n\n<li><strong>Itemized list and description<\/strong> of services<\/li>\n\n\n\n<li><strong>Date or duration<\/strong> of the service<\/li>\n\n\n\n<li><strong>Pricing breakdowns<\/strong>, such as hourly or flat rates<\/li>\n\n\n\n<li><strong>Business component or product<\/strong> related to the service<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">For more guidance on handling leased computer costs in Iowa and elsewhere, reach out to your TaxOps advisor. &nbsp;<\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/taxops.com\/contact\/\" target=\"_blank\" rel=\"noreferrer noopener\">Wondering if you Qualify for R&amp;D Credits? Contact Us<\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<figure class=\"wp-block-image aligncenter size-full\"><img decoding=\"async\" width=\"800\" height=\"2000\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\" data-src=\"https:\/\/taxops.com\/wp-content\/uploads\/2021\/08\/TaxOps-Min-RD-Eligibility-3.png\" alt=\"\" class=\"wp-image-8679 lazyload\" data-srcset=\"https:\/\/taxops.com\/wp-content\/uploads\/2021\/08\/TaxOps-Min-RD-Eligibility-3.png 800w, https:\/\/taxops.com\/wp-content\/uploads\/2021\/08\/TaxOps-Min-RD-Eligibility-3-480x1200.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) 800px, 100vw\" \/><noscript><img decoding=\"async\" width=\"800\" height=\"2000\" src=\"https:\/\/taxops.com\/wp-content\/uploads\/2021\/08\/TaxOps-Min-RD-Eligibility-3.png\" alt=\"\" class=\"wp-image-8679 lazyload\" srcset=\"https:\/\/taxops.com\/wp-content\/uploads\/2021\/08\/TaxOps-Min-RD-Eligibility-3.png 800w, https:\/\/taxops.com\/wp-content\/uploads\/2021\/08\/TaxOps-Min-RD-Eligibility-3-480x1200.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) 800px, 100vw\" \/><\/noscript><\/figure>\n\n\n\n<div style=\"height:37px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Dig into R&amp;D with Instant Downloads<\/h3>\n\n\n\n<div style=\"height:60px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/taxops.com\/wp-content\/uploads\/2021\/08\/Pay-less-Invest-more.-2020.pdf\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Pay Less Tax, Invest More with R&amp;D Credits<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/taxops.com\/wp-content\/uploads\/2021\/02\/Game-changer-puts-RD-credits-within-reach.2021.pdf\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Game-changer Puts R&amp;D Credits within Reach<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:60px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">More Tax News<\/h3>\n\n\n<ul class=\"wp-block-latest-posts__list wp-block-latest-posts\"><li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/auditor-independence-in-the-age-of-private-equity\/\">Auditor Independence in the Age of Private Equity: What CFOs Need to Know<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/r-d-credits-for-software-companies\/\">R&amp;D Credits for Software Companies: Scrum Teams, Qualifiers, and Section 174 After OBBBA<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/section-174-decoupling-what-tax-pros-need-to-know-state-by-state\/\">Section 174 Decoupling: What Tax Pros Need To Know State By State<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/sean-espy-new-partner\/\">TaxOps Welcomes Sean Espy as Partner, Tax Minimization<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/state-nexus-demystified-navigating-tax-compliance-after-wayfair-episode-1-2\/\">Your Tax Footprint Is Probably Bigger Than You Think: What Finance Leaders Need to Know About State Nexus<\/a><\/li>\n<\/ul>\n\n\n<div style=\"height:59px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/taxops.com\/contact\/#subscribe\" target=\"_blank\" rel=\"noreferrer noopener\">Subscribe to Tax News<\/a><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Cloud computing costs in Iowa are excluded in calculations for R&amp;D credits, but treatment of leased computing varies by state. Cloud computing costs are also an audit issue so, shore up documentation. By Jamie Overberg The inclusion of cloud costs in the calculation of research and development (R&amp;D) credits varies by state. Iowa\u2019s latest changes [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":13433,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"off","_et_pb_old_content":"<!-- wp:spacer {\"height\":27} -->\r\n<div class=\"wp-block-spacer\" style=\"height: 27px;\" aria-hidden=\"true\">\u00a0<\/div>\r\n<!-- \/wp:spacer --><!-- wp:paragraph -->\r\n<p><em>Any company that develops new or improved products, processes, or software\u2014in some cases, whether profitable or not\u2014may qualify for these lucrative credits.<\/em> <em>Wondering if you are eligible to take advantage of lucrative research credits that could cut your federal and state tax liability?\u00a0Find out here!<\/em><\/p>\r\n<!-- \/wp:paragraph --><!-- wp:paragraph -->\r\n<p>When it comes to research and development tax credits, certain costs related to wages, supplies and contract research are eligible. Often, though, taxpayers \u2014 and more specifically, the engineers doing the work \u2014 overlook various processes and routine work that can be tapped for extra tax savings.<\/p>\r\n<!-- \/wp:paragraph --><!-- wp:paragraph -->\r\n<p>R&amp;D credits aren\u2019t limited to what\u2019s never been done before. Yet, each year, corporations and pass-throughs across industries fail to claim R&amp;D tax credits because they aren\u2019t aware of how few eligible employees are necessary to claim the credits or the many day-to-day activities that qualify for dollar-for-dollar reductions in income tax liability.<\/p>\r\n<!-- \/wp:paragraph --><!-- wp:paragraph -->\r\n<p>Check the chart below to determine whether you are eligible for R&amp;D credits. TaxOps Minimization puts R&amp;D credits within reach.<\/p>\r\n<!-- \/wp:paragraph --><!-- wp:spacer {\"height\":40} -->\r\n<div class=\"wp-block-spacer\" style=\"height: 40px;\" aria-hidden=\"true\">\u00a0<\/div>\r\n<!-- \/wp:spacer --><!-- wp:buttons -->\r\n<div class=\"wp-block-buttons\"><!-- wp:button -->\r\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/taxops.com\/contact\/\" target=\"_blank\" rel=\"noreferrer noopener\">Qualified? Contact Us<\/a><\/div>\r\n<!-- \/wp:button --><\/div>\r\n<!-- \/wp:buttons --><!-- wp:spacer {\"height\":40} -->\r\n<div class=\"wp-block-spacer\" style=\"height: 40px;\" aria-hidden=\"true\">\u00a0<\/div>\r\n<!-- \/wp:spacer --><!-- wp:image {\"align\":\"center\",\"id\":8679,\"sizeSlug\":\"full\",\"linkDestination\":\"none\"} -->\r\n<div class=\"wp-block-image\">\r\n<figure class=\"aligncenter size-full\"><img class=\"wp-image-8679\" src=\"https:\/\/taxops.com\/wp-content\/uploads\/2021\/08\/TaxOps-Min-RD-Eligibility-3.png\" alt=\"\" \/><\/figure>\r\n<\/div>\r\n<!-- \/wp:image --><!-- wp:spacer {\"height\":37} -->\r\n<div class=\"wp-block-spacer\" style=\"height: 37px;\" aria-hidden=\"true\">\u00a0<\/div>\r\n<!-- \/wp:spacer --><!-- wp:heading {\"level\":3} -->\r\n<h3>Dig into R&amp;D with Instant Downloads<\/h3>\r\n<!-- \/wp:heading --><!-- wp:spacer {\"height\":60} -->\r\n<div class=\"wp-block-spacer\" style=\"height: 60px;\" aria-hidden=\"true\">\u00a0<\/div>\r\n<!-- \/wp:spacer --><!-- wp:buttons -->\r\n<div class=\"wp-block-buttons\"><!-- wp:button -->\r\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/taxops.com\/wp-content\/uploads\/2021\/08\/Pay-less-Invest-more.-2020.pdf\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Pay Less Tax, Invest More with R&amp;D Credits<\/strong><\/a><\/div>\r\n<!-- \/wp:button --><\/div>\r\n<!-- \/wp:buttons --><!-- wp:buttons -->\r\n<div class=\"wp-block-buttons\"><!-- wp:button -->\r\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/taxops.com\/wp-content\/uploads\/2021\/02\/Game-changer-puts-RD-credits-within-reach.2021.pdf\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Game-changer Puts R&amp;D Credits within Reach<\/strong><\/a><\/div>\r\n<!-- \/wp:button --><\/div>\r\n<!-- \/wp:buttons --><!-- wp:spacer {\"height\":60} -->\r\n<div class=\"wp-block-spacer\" style=\"height: 60px;\" aria-hidden=\"true\">\u00a0<\/div>\r\n<!-- \/wp:spacer --><!-- wp:heading {\"level\":3} -->\r\n<h3>More Tax News<\/h3>\r\n<!-- \/wp:heading --><!-- wp:latest-posts \/--><!-- wp:spacer {\"height\":59} -->\r\n<div class=\"wp-block-spacer\" style=\"height: 59px;\" aria-hidden=\"true\">\u00a0<\/div>\r\n<!-- \/wp:spacer --><!-- wp:buttons -->\r\n<div class=\"wp-block-buttons\"><!-- wp:button -->\r\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/taxops.com\/contact\/#subscribe\" target=\"_blank\" rel=\"noreferrer noopener\">Subscribe to Tax News<\/a><\/div>\r\n<!-- \/wp:button --><\/div>\r\n<!-- \/wp:buttons -->","_et_gb_content_width":"","spt_transcript":"","footnotes":""},"categories":[382,78,226],"tags":[388,133,778,126,449,777,780,562,779,350],"class_list":["post-13428","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-main-tax-min","category-tax-savings","category-tax-news","tag-accounting-professionals","tag-accounting-today","tag-capitalization","tag-cpa","tag-engineers","tag-rd-credits","tag-research-costs","tag-research-credits","tag-research-expense","tag-taxops-minimization"],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/taxops.com\/wp-content\/uploads\/2024\/07\/Iowas-New-Computer-Costs-Treatment-on-RD-Credits-and-Documentation-1.png","_links":{"self":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/13428","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/comments?post=13428"}],"version-history":[{"count":2,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/13428\/revisions"}],"predecessor-version":[{"id":13437,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/13428\/revisions\/13437"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/media\/13433"}],"wp:attachment":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/media?parent=13428"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/categories?post=13428"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/tags?post=13428"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}