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17 Sep 2014

Delaware boosts small business

Delaware will soon allow businesses with less than $20 million in average revenue over the prior 4 tax years to claim a state research tax credit equal to 100% of the Federal R&E tax credit. Currently all companies are allowed a Delaware R&D credit equal to 50% of the Federal amount based on expenditures within the state.

Businesses with more than $20 million in average revenue will still be eligible the state credit at the old 50% rate. The legislation signed by Gov. Markell maintains the old annual cap of $5 million for the credit as a whole.

4 Sep 2014

Massachusetts Enacts Alternative R&E Credit Calculation

Massachusetts Gov. Deval Patrick has signed legislation that both simplifies and increases the R&E credit over the next decade. The change provides for a calculation methodology similar to the Federal Alternative Simplified method. This method will be available for calendar years beginning after 2014 and calculated based on qualified research expenses that exceed half of the three prior year’s average expenses. The credit percentage is 5% for 2015 – 2017, 7.5% for 2018 – 2020, and 10% after 2020.

4 Jun 2014

Alternative Simplified Method Now An Option for Amended Returns

On June 2nd the IRS issued temporary regulations (T.D. 9666) allowing for the election of the Alternative Simplified calculation method on an amended return.  The temporary regulations were also simultaneously issued as the final proposed regulations.

Now taxpayers will not be forced to use the Traditional calculation methodology when going back to open tax years to recoup R&E tax credits.  As long as no research credit was taken in the tax year being amended, the Alternative Simplified will be available.  The regulations do not allow a taxpayer to amend a claim calculated using Traditional Calculation methodology and elect the Alternative Simplified.

26 Mar 2014

Hawaii steps up offering with refundable research credit

Looking to attract and keep more innovative companies, Hawaii goes refundable for qualifying research activities.

Read the legislation here.

18 Sep 2013

North Carolina Extends Research Credit

North Carolina House Bill 998 – the Tax Simplification and Reduction Act – renames and extends the current Technology Development Credit.  The new (in name only) Research and Development Credit extends the current tax benefit through 2015.  Highlights of the North Carolina Research Credit include:

  • A credit of 1.25% – 3.25% of the amount of R&D expenses – depending on exact circumstances
  • Cannot exceed 50% of the tax liability in any particular year
  • May be carried forward up to 15 taxable years 

More info is also available at Thrive NC website.

19 Aug 2013

Delaware Makes R&D Credit Permanent

In the continuing battle for states to attract innovative business, Delaware Gov. Markell signed HB 143 Ch.81 establishing the R&D credit as a permanent incentive that can be claimed against corporate and personal income taxes effective July 1, 2013.  The previous R&D credit ended December 31, 2012.

The Delaware R&D credit provides:

  • A 10% credit for excess QREs over the Delaware base amount, or
  • 50% of Delaware’s apportioned share of the Federal credit calculated using the AIC method
  • Total credit may not exceed 50% of qualified tax liability in any taxable year
  • Credit limitation for the entire state equals $5,000,000 in total