CASE STUDY: CONSTRUCTION — R&D CREDITS
Four years of R&D tax credits sat unclaimed on a design-build contractor's books
Cornerstone Build Co. is a San Francisco-based design-build general contractor generating roughly $5M in annual revenue. As a design-build firm, Cornerstone doesn’t just execute someone else’s blueprints — they develop custom framing methods, test new material combinations, and solve engineering problems on ground-up residential and light commercial builds. That kind of hands-on design and engineering work is exactly what federal and California R&D tax credit programs exist to reward, though most construction firms never realize they qualify, because the work doesn’t look like a laboratory in the traditional sense.
Design-Build General Contractor
INDUSTRY
~$5M annually
REVENUE RANGE
Recover unclaimed R&D tax credits and build audit-ready documentation
PRIMARY GOAL
The roadblock
Cornerstone came to Basta already profitable and established, but their books told an incomplete story. Their previous accountant had never flagged that years of custom framing development and materials testing could qualify for R&D credits — meaning four consecutive tax years of potential savings sat unclaimed. Beyond the missed credit itself, their bookkeeping wasn’t structured to isolate qualifying research costs, so even if they claimed the credit, they wouldn’t have had documentation to defend it if a state agency asked questions.
What we did
01
Ran a formal R&D study
Brought in a third-party specialist to review four tax years of project files and identify qualifying design and engineering costs.
02
Rebuilt the chart of accounts
Restructured bookkeeping so qualifying research expenditures stayed cleanly separated going forward.
03
Filed and defended
Filed credits for prior years, amended a return once additional qualifying costs surfaced, and kept documentation audit-ready.
What solved it: Building documentation before you need it
The single highest-value move here wasn’t identifying the credit — it was restructuring the books so qualifying costs stayed separated going forward. Many construction firms that claim R&D credits do so once, take the check, and let their books drift back to the old undifferentiated structure. Cornerstone’s documentation is holding up so far specifically because the underlying bookkeeping had been fixed, not just the tax return. For any contractor sitting on unclaimed credits: the credit is only half the win. The other half is making sure your books can prove it every year after — including the year a state agency actually asks.
The results
$146K
in R&D credits recovered across 4 tax years
0
adjustments issued to date
$30–40K
projected annual credit, now built into yearly tax planning
Beyond the immediate dollar figure, Cornerstone is working through the much larger risk of a state review going badly. Because the credits were backed by clean, isolated documentation from day one, the review so far has proceeded without any adjustments — the kind of outcome that, if it holds, avoids penalties, interest, and professional fees that can otherwise cost far more than the original credit was worth. The review is ongoing, and the documentation built during the original engagement is what’s carrying it.
"We didn't know we qualified for any of this. Now it's just part of how we plan every year, instead of money we never knew we were leaving on the table."
*This case study reflects real engagement work anonymized to protect client confidentiality. Names, locations, and financial figures are illustrative composites.
What worked
A one-time specialist study to unlock four years of past value, paired with a permanent accounting change to protect that value indefinitely. Filing without restructuring the books would have left Cornerstone exposed the moment anyone asked for backup; restructuring without the study would have left four years of money on the table.
Key takeaways
- R&D tax credits aren’t just for tech companies or labs — design-build contractors who develop methods or test materials often qualify.
- A missed credit is rarely just missed money; it’s usually also a bookkeeping gap that needs fixing before the credit can be safely claimed.
- Getting ahead of documentation before a state review is what separates a clean review from a stressful one — even while it’s still underway.
See what this looks like for your business.
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