The White House announced that President Obama on Friday, December 18, 2015, signed into law H.R. 2029, the “Consolidated Appropriations Act, 2016.” This legislation combines and includes the tax provisions of the “Protecting Americans from Tax Hikes Act of 2015” (PATH Act) and the omnibus spending bill. Certain provisions have an effective date based on the “date of enactment” which is December 18, 2015.
The research credit has been reinstated for qualified research expenses paid or incurred on or after January 1, 2015. The current methods of calculating the credit have not changed as a result of the legislation. Taxpayers still have the option of electing a traditional regular credit at a rate of 20%, or the alternative simplified credit (ASC) at a rate of 14%.
Effective for research credits determined for tax years beginning after 2015, certain businesses with average annual gross receipts of $50 million or less will be allowed to offset their AMT liability with the credits. Also, for tax years beginning after 2015, certain start-up companies with gross receipts for the year of less than $5 million will be allowed to elect to apply up to $250,000 of their research credit against their payroll tax liability, instead of their income tax liability.