The biggest difference between the R&D tax credit and an NOL is that the R&D tax credit can be used to offset taxes owed in the current year, while an NOL can only be used to offset taxes owed in future years. Additionally, the R&D tax credit can be used to offset a wide variety of taxes, including income taxes, payroll taxes, and even some excise taxes. By contrast, an NOL can generally only be used to offset income taxes. Another key difference is that there are no restrictions on how the R&D tax credit can be used; businesses and individuals can use it however they see fit. This flexibility makes the R&D tax credit an attractive option for companies and individuals looking to reduce their tax liability. When it comes to choosing between the R&D tax credit and an NOL, it depends on your unique situation. If you have an NOL for a given year, speak with a tax professional to see if it makes sense to use it to offset taxes owed in future years. On the other hand, if you’re looking for a way to reduce your tax liability in the current year, the R&D tax credit may be a better option. Unlike NOLs, which are recorded on the balance sheet as deferred tax assets, R&D tax credits are not accounted for in the company’s financial statements. Because they are accounted for in the financial statements differently than they should be, this often causes perplexity over their true value. Whether they’re recorded as an asset on the balance sheet, they’re still a key asset to any business that might provide substantial value in company valuations and M&A deals. The timing of a company strategy shift to a profitable position is unknown, but the fact remains that accumulated R&D tax credits will benefit all discounted cash flow calculations. Even if you are not presently utilizing the credits, if you apply a discounted cash flow analysis to your company valuations, the tax credit offsets will raise your valuation as your business grows in future years.