State R&D Tax Credits

Minnesota

Credit Name: 290.068 Credit for Increasing Research Activities

Expiration Date: None

Does it apply to C corps and pass-through entities?: Applies to C-Corps, S corps and flow through entities beginning tax year 2011. Applies only to C-Corps for tax year 2010 and earlier.

Credit Carry forward: Beginning 2013 the credit is non-refundable.  Carry forward is 15 years.

Description:  10% of the first $2,000,000 of the excess of:

(1) the qualified research expenses for the taxable year, over

(2) the base amount and

– 4% on all of such excess expenses over $2,000,000 for tax years beginning after December 31, 2016

– 2.5% on all of such excess expenses over $2,000,000 for tax years beginning before January 1, 2017

“Base amount” as defined in section 41(c) of the Internal Revenue Code, except that the average annual gross receipts must be calculated using Minnesota sales or receipts.

Other Notes:  While the form specifically outlines on the traditional base period of 1984 through 1988, the federal definitions under 41(c)(3)(B) apply to start-up companies. Note there is no provision for an alternative simplified credit for Minnesota as provided for federal under 41(c)(5).