Instructions For Form 6765 - Credit For Increasing Research Activities (Or For Claiming The Orphan Drug Credit) - 1993
ADVERTISEMENT
1
2clinical testing expenses are not limited
Department of the Treasury
to 65% (.65) of any contract research
expenses, there is no requirement that
Internal Revenue Service
expenses exceed those for a base
period, and the expenditure must be for
“qualified clinical testing” as defined in
Instructions for Form 6765
sections 28(b)(1) and (2). Expenses that
qualify under section 28 cannot also
qualify for the research credit under
Credit for Increasing Research Activities (or for
section 41.
claiming the orphan drug credit)
Even though you cannot use the same
expenses to claim both the research
Section references are to the Internal Revenue Code unless otherwise noted.
credit and the orphan drug credit, any
expenses used in computing the orphan
drug credit must be included in any
Items To Note
Qualified research is limited to
research credit “base amount”
scientific experimentation or engineering
computations in future years.
The credit for increasing research
activities designed to aid in the
activities and the orphan drug credit
development of a new or improved
Special Rules
were extended retroactively from June
product, process, technique, formula,
30, 1992. The research credit was
invention, or computer software program
See section 41(f) for special rules related
extended through June 30, 1995. The
held for sale, lease, or license, or used
to:
orphan drug credit was extended
by you in a trade or business. For
1. Controlled groups of corporations
through December 31, 1994. File an
in-house research expenses (see section
and businesses under common control;
amended 1992 return to claim any credit
41(b)(2)), this trade or business
2. Allocation of the credit by
for expenses paid or incurred after June
requirement will be met if your principal
partnerships, estates, and trusts;
30, 1992, through the end of your 1992
purpose for conducting the research is
tax year.
3. Adjustments if a major portion of a
to use the results of the research in the
business is acquired or disposed of; and
The fixed-base percentage
active conduct of a future trade or
computation for startup companies is
4. Short tax years.
business. See section 41(b)(4).
changed for tax years beginning after
For special rules concerning the
The research credit is generally not
December 31, 1993. The percentage is
allocation and apportionment of research
allowed for the following types of
3% for the first 5 years. See section
and experimental expenditures between
activities:
41(c)(3) for other details.
U.S. and foreign source income, see
Research conducted after the
sections 861 through 864.
beginning of commercial production;
General Instructions
If you cannot use the research credit
Research adapting an existing product
because of tax liability limitations, carry
or process to a particular customer’s
it back 3 years, then forward 15 years.
Purpose of Form
need;
Use Form 3800.
Duplication of an existing product or
Use Form 6765 to figure and claim the
There are no carryback or carryover
process;
general business credit for increasing
provisions for the orphan drug credit.
the research activities of a trade or
Surveys or studies;
However, your minimum tax carryover is
business and to claim the orphan drug
Research relating to certain
increased if your orphan drug credit is
credit. Complete Parts II, III, and IV (or
internal-use computer software;
limited by the tentative minimum tax.
Form 3800, if required) to figure the
Research conducted outside the
research credit. Complete Parts I and II
United States;
Specific Instructions
to figure the orphan drug credit.
Research in the social sciences, arts,
or humanities; or
Who Must File
Part I—Current Year Orphan
Research funded by another person
Drug Credit
An individual, estate, trust, organization
(or governmental entity).
or corporation claiming a credit for
Line 2.—You must reduce the deduction
If you incur qualified clinical testing
increasing research activities or for
for qualified clinical testing expenses
expenses relating to drugs for certain
orphan drug expenses, or any S
otherwise allowable on your income tax
rare diseases, you may elect to claim
corporation, partnership, estate, or trust
return by the amount of the credit
the orphan drug credit on these
that allocates the credit(s) to its
shown on line 2. See section 280C(b) for
expenses instead of taking the research
shareholders, partners, or beneficiaries
special rules.
credit.
should complete this form and attach it
Line 3.—Enter the amount of credit that
See section 41 for other definitions
to its income tax return.
was allocated to you as a shareholder,
and special rules concerning the
S corporations, partnerships, estates,
partner, or beneficiary.
research credit.
and trusts that allocate the credit(s) on
Line 4.—If you have credits from passive
Orphan drug credit.—This is an elective
lines 4 and 28 to any shareholder,
activities, see Form 8582-CR, Passive
tax credit available for 50% (.50) of
partner, or beneficiary must show on the
Activity Credit Limitations, or Form
qualified clinical testing expenses of
appropriate line of Schedule K-1, or on
8810, Corporate Passive Activity Loss
low-profit or unprofitable drugs for rare
an attachment to Schedule K-1, the
and Credit Limitations, before
diseases and conditions, as designated
credit allocable for that shareholder,
completing the rest of this form.
under section 526 of the Federal Food,
partner, or beneficiary.
Drug, and Cosmetic Act, paid or
Estates and trusts.—The orphan
incurred during the tax year. For details,
drug credit on line 4 is allocated
Definitions
see Regulations section 1.28-1.
between the estate or trust and the
Research credit.—The research credit is
beneficiaries in the same proportion as
The orphan drug credit is similar to
generally allowed for qualified research.
income was allocated. On the dotted
the credit under section 41 for qualified
line to the left of the amount on line 4,
research expenditures, except that
Cat. No. 13701S
ADVERTISEMENT
0 votes
Related Articles
Related forms
Related Categories
Parent category: Financial