Montana Form Rsch Draft - Increase Research And Development Activities Credit - 2011 Page 3
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3exceed the line 2 base amount. See IRC § 41(e)(1)
receipts everywhere for its fi fth through seventh
(B). However use 75% (.75) in place of 65% (.65) for
years
payments made to a qualifi ed research consortium.
•
for the ninth year, two-thirds of the percentage
A qualifi ed research consortium is a tax-exempt
which qualifi ed research expenses bear to gross
organization described in section 501(c)(3) or 501(c)
receipts everywhere for its fi fth through eighth
(6) that is organized and operated primarily to conduct
years
scientifi c research and is not a private foundation.
•
for the tenth year, fi ve-sixths of the percentage
Line 9. Compute the fi xed-base percentage as
which qualifi ed research expenses bear to gross
follows: The fi xed-base percentage for an existing
receipts everywhere for its fi fth through ninth
company (any company that is not a start-up
years
company) is calculated by dividing the aggregate
For subsequent tax years, the taxpayer’s fi xed-
qualifi ed research expenses for tax years beginning
base percentage will be the whole percentage
after 1983 and before 1989 by the aggregate gross
which qualifi ed research expenditures bear to gross
receipts for those tax years. For multistate taxpayers,
receipts everywhere for any fi ve years selected by the
a by-state breakdown of gross receipts is required.
taxpayer from the fi fth through tenth tax years.
The allocation of sales to Montana in the by-state
The maximum percentage that can be entered on line
breakdown must conform to 15-31-311, MCA.
9 is 16% (0.16).
Round off the percentage to the nearest 1/100 of 1%
Line 10. Enter the average Montana annual gross
(0.0001) (i.e. four decimal places).
receipts for the four tax years preceding the tax year
Start up companies - A start up company is a taxpayer
for which the credit is being determined (called the
that had both gross receipts and qualifi ed research
credit year). You may be required to annualize your
expenses either:
gross receipts for any short tax year. See IRC § 41(c)
•
for the fi rst time in a tax year beginning after 1983,
(1)(B) and 41(f)(4).
or
For purposes of lines 9 and 10, reduce Montana gross
•
for less than three tax years beginning after 1983
receipts everywhere for any tax year by returns and
and before 1989.
allowances made during the tax year. In the case of
For tax years beginning before January 1, 1994, the
a foreign corporation, include only gross receipts that
fi xed-base percentage is 3% (0.03) if you have fewer
are effectively connected with the trade or business
than three taxable years beginning after December
within the United States.
31, 1983 and before January 1, 1989, in which
Line 13. The base amount cannot be less than 50%
you had both gross receipts and qualifi ed research
(0.50) of the current year qualifi ed research expenses.
expenses. If the percentage computation involves
The rule applies to existing and newly organized
insignifi cant amounts of gross receipts and qualifi ed
businesses.
expenses in a tax year or short tax years are involved,
see IRC § 41(c)(3) and 41(f)(4).
Part III
For tax years beginning after December 31, 1993,
Total Research and Development Tax Credit
the fi xed-base percentage is 3% (0.03) for each of
Enter line 18 on Form 2, Schedule V, for individuals;
the fi rst fi ve tax years for which there were qualifi ed
Form PR-1, Schedule II, for partnerships; Form
research expenses. However, the fi xed-base
CLT-4S, Schedule II, for S corporations; or to Form
percentage for the sixth through tenth years after
CLT-4, Schedule C, for C corporations.
1993 in which the percentage (rounded to 1/100 of
1% (0.0001)) which qualifi ed research expenses bear
Questions? Please call us toll free at (866) 859-2254
to gross receipts everywhere for specifi ed preceding
(in Helena, 444-6900).
years as follows:
•
for the sixth year, one-sixth of the percentage
which qualifi ed research expenses bear to gross
receipts everywhere for its fourth and fi fth years
•
for the seventh year, one-third of the percentage
which qualifi ed research expenses bear to gross
receipts everywhere for its fi fth through sixth years
•
for the eighth year, one-half of the percentage
which qualifi ed research expenses bear to gross
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