Case Study: Software

How this Software company has claimed $349,332 in Federal and State R&D Tax Credits!

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Research & Development Credit for Software

The R&D Tax Credit Experience with Leyton

It’s nice to have a counterpart that understands the “tech” behind our projects, because that’s always the hardest thing to communicate. For Leyton’s software team to catch that, really understand it and transform it into a report was a big help! I see the value in that. – Dave Landry, Co-founder, Datawheel

Research & Development Credit for Software

Background


Founded in 2013 and headquartered in Cambridge, MA, Datawheel is a software firm that delivers data integration, distribution and visualization solutions. Datawheel helps businesses and governments to analyze and visualize disconnected and fragmented data to make informed strategic decisions. They offer unique services including DataLocation and DataCompany that bring customized data sets together to visualize their client’s data. In addition, Datawheel’s Research Labs are always conducting R&D projects to improve backend tools, data distribution platforms, & finding new solutions to complex visualization challenges.

Qualifying R&D Activity

Among many R&D projects at Datawheel, a number of qualifying projects were derived from their DataLocation services. One is Data USA: A platform that leverages over 21 different publicly available data sets to serve as a public service tool to enable informed decision making. This platform synthesizes and visualizes available public data sets such as: labor data, economic data, & other types of social data to provide an improved comprehension of the US as a whole.

Another qualifying project includes data synthesis and visualization for the Center for Disease Control (CDC). This unique platform provides a public health law information portal with online visualization tools for legal epidemiology datasets provided by the CDC. The project was developed in late 2020 and has faced several challenges that were solved through a process of experimentation into how to ingest, structure, and organize data.

Research & Development Credit for Software

Benefit: $349,332 in Federal and State R&D Tax Credits!

Once Leyton’s tax and technical teams qualified the related expenses to their research and development projects, we were able to build a substantive R&D Tax Credit claim for the client, backed by a comprehensive R&D Study that explains how each project meets the IRS criteria to claim the credit. Datawheel has been claiming their Federal R&D Tax Credit with Leyton since 2016.

For their 2020 R&D Claim, we were able to qualify the following QRE (Qualified Research Expenses) for Datawheel:

70% of employee salaries qualified: job titles include software architects, economists, front end and back end developers, CTO, & Co-founders.
48%
of contractor costs.
48% of cloud computing costs for developing data visualization platforms.

From 2016 to 2020, Leyton has helped this client claim a gross amount of $349,332 in Federal and State R&D Tax Credits!


Research & Development Credit for Software

It was an interesting exercise to look back at our projects and uncover qualifying R&D. We filed amended returns, recouped the money, and put it back into the company!