Research and Development Tax Credit Study and Succession Planning
Located in Tomah, Wisconsin, Valley Corporation is a cranberry grower that was first established in 1891. The family operation consists of third-generation growers who own 240 acres of cranberry beds, 95% of which are the company’s own high-yield hybrids.
Through a community advisory partnership, Wipfli learned that Valley Corporation breeds unique and highly productive cranberry varieties. As a result, the firm suggested the company could quality for an R&D tax credit and suggested a study—something Valley Corporation’s previous tax firm had never mentioned. Wipfli also recognized Valley Corporation’s need for entity selection and estate planning to help ensure that the third-generation business could be optimally transferred to the next generations.
Wipfli met with Valley Corporation and conducted an initial feasibility assessment to weigh the costs of performing a comprehensive study against the potential tax savings. The assessment showed a $30,000 tax credit for the current year—a credit that was substantially greater than the study cost, convincing Valley Corporation of the value.
As part of the study, Wipfli identified the hybrid breeding activities and expenses that would qualify for the tax credit. The firm also gathered the necessary documentation needed to substantiate the credit.
Wipfli also conducted entity restructuring to protect Valley Corporation’s assets and followed up with estate and retirement planning assistance to better position the business and its future for all stakeholders.
Valley Corporation is now saving money and is tax efficient. In addition to its current year tax credit, the company’s savings were compounded by Wipfli’s three-year lookback study in which Valley Corporation would net nearly $40,000.
The company also has a clearer vision of its long-term goals. An established 401(k) plan allows the group to invest $80,000 annually in a retirement plan on a tax-deferred basis versus just $22,000 with an IRA. The veteran stakeholders are saving for retirement, confident in the knowledge that they will sell or gift the business to the next generation with the best interests of all involved.