Commonly Qualifying Tasks:
- Improvements to manufacturing and distribution processes
- Ongoing design and development to subterranean wine cave improvements
- Evaluating soil, water availability, and ground slopes to assess optimal grape cultivation
- Investigating method improvements to packaging materials and counter-pressure filling technologies
- Sustainable energy efforts
- Efforts to improve the economic efficiency of the fermentation process
- Developing and testing product prototype batches
The R&D credit is a great opportunity for wineries to receive incentives for conducting research and development that is a normal part of any growing business. Since wine-making in itself is a repeatable process that produces a product, any work that is done toward making the process itself more efficient, the quality of the end product better, or even determining how to produce the best grapes for pressing all can qualify for the tax credit.
Insofar as the process is concerned, there are qualifying activities that can be identified at all phases of development. Initial work into developing a new wine even conceptual work in terms of defining requirements and target markets all inform the process as it continues and would be considered qualifying activity. In addition, work and materials utilized to improve the taste, texture, finish and overall quality of the wine would also qualify.
For instance, wine producing companies have to evaluate various individual processes that make up the entire production process. One of these processes might be the crushing of wine grapes. In order to test the effectiveness of any newly developed methods, the company must incur not only the cost of the labor necessary to crush the grapes themselves, but also the materials that would be consumed in this process as long as uncertainty of the final process exists. In addition, any additional costs such as the cost of testing and analyzing the first run yields could be considered qualifying activity.
Another common area to search for qualifying activity would be in the bottling process which is usually automated and developed to minimize any microbial invasion of products in addition to making overall packaging processes more accurate and more efficient.