Veterinarian At Swine Farm

Research and development are a natural part of business for leading swine producers — now they can get a tax credit for it.

Tax strategies

Swine Producers Now Eligible for Research and Development Tax Credit

  • Eric Beenken
  • 8/3/2017

The research and development (R&D) tax credit has been in the tax code since the 1980s. Many industries have taken advantage of this incentive to help defray the costs incurred of innovation in science and technology; however, a majority of operations in the agriculture industry, including swine, couldn’t use the credit because of the limitations imbedded in the law. In 2016, many of these limitations were removed, giving agribusinesses the opportunity to claim eligible activities.

Many activities qualify as research or innovation

Hog production in the United States is a mature industry, and there are very few secrets; however, there is no shortage of innovation in the industry. In 2017, the USDA recorded a 32+ million hog crop, which is up 4 million head from 10 years ago. It also reported 3.5 million sows farrowed in 2017, which is the same as it was 10 years ago. The increase in hog crop is the direct result of producers embracing the challenge of continuous improvement by engaging in research and experimentation, and using science and technology in their processes. Much of this improvement occurred in a time of heightened social sensitivity to animal rights by activist groups and consumers.

Many of the innovative practices that producers have been experimenting with and developing may qualify for the R&D credit. Eligible activities may include:

  • Developing new methods to prevent or recover more quickly from porcine epidemic diarrhea virus, porcine reproductive and respiratory syndrome, swine influenza virus, and other diseases
  • Exploring improved breeding practices to increase pigs per sow per year
  • Experimenting with the removal of waste control to better control and reduce risk of environment hardship
  • Performing feed and nutrition trials on control groups
  • Developing new feeding techniques
  • Experimenting with barn stocking densities and pen design
  • Researching genetics in control groups to improve breeding herd traits
  • Exploring new uses and applications for equipment and automation

How we can help

The IRS is providing a three-year lookback window to amend returns so swine producers can take advantage of this credit. CLA has experienced R&D credit professionals who can help you explore the activities you may be doing now to see if they qualify as research activities.

You may qualify for a tax credit if you are designing new products/processes or improving existing ones. Our R&D video shows you how.