Instructions For Arizona Form 308 - Research And Development Expenses Credit

Arizona Form 308

eligible for a "basic research" credit if their payments made

(b) Sixty-five percent (.65) of any amount paid or incurred

in cash to a qualified university or scientific research

for qualified research performed in Arizona on the

organization (pursuant to a written contract) exceed a base

taxpayer's behalf, other than such amounts paid to a

period amount. The basic research payments must be made

qualified research consortium. Prepaid contract research

for research conducted in Arizona. Enter the amount of such

expenses are considered paid in the year the research is

payments on line 1.

actually done. Also include 65 percent of that portion of

line 1, basic research payments that does not exceed the

Line 2 -

line 2 base amount, other than amounts paid to a

Enter the base period amount as defined by IRC § 41(e) that

qualified research consortium.

is based on Arizona research activity. The amount on line 2

Line 9 -

(but not more than the amount on line 1), although not

eligible for the basic research credit, can be treated as

Enter the average annual Arizona gross receipts for the four

contract research expenses on line 7.

taxable years preceding the taxable year for which the credit

is being determined. The taxpayer may be required to

Line 4 -

annualize gross receipts for any short taxable year.

Enter total wages paid or incurred for qualified services

Line 10 -

performed in Arizona. Do not include the amount of such

wages paid to employees hired after September 30, 1996,

Round off the percentage to the nearest one, one hundredth

that were used in the calculation of the federal work

of one percent (four decimal places). Compute the fixed-base

opportunity credit. Wages include any wages paid or

percentage as follows:

•

incurred to an employee for qualified services performed by

Existing firms - An existing firm is one that had both

such employee. Qualified services consist of engaging in

Arizona gross receipts and Arizona qualified research

qualified research or engaging in the direct supervision or

expenses for at least three taxable years beginning after

direct support of research activities which constitute

December 31, 1983, and before January 1, 1989. The

qualified research.

fixed-base percentage is the ratio that the aggregate

Line 5 -

Arizona qualified research expenses for all taxable years

beginning after 1983, and before 1989, bears to the

Enter the cost of supplies paid or incurred for use in the

aggregate Arizona gross receipts for such taxable years.

conduct of qualified research in Arizona. Supplies include

•

expenditures for any tangible property other than land or

Start-up companies - A start-up company is one that

improvements to land, and property of a character subject to

had both Arizona gross receipts and Arizona qualified

the allowance for depreciation.

research expenses either (1) for the first time in a taxable

year beginning after December 31, 1983, or (2) for fewer

Line 6 -

than three taxable years beginning after 1983 and before

Enter the amount paid or incurred to rent or lease the right

1989.

to use computers in the conduct of qualified research in

Fixed-Base Percentages for Taxable Years Beginning

Arizona.

After 1993 in Which Start-Up Companies Incurred Arizona

Line 7 -

Qualified Research Expenses

Taxable Year

Percentages for Taxable Years After

Enter the total of:

After 1993

1993

(a) Seventy-five percent (.75) of any amount paid or

incurred for qualified research performed in Arizona by

1st through 5th

3 percent

a qualified research consortium on the taxpayer's behalf.

1/6 of the percentage which the aggregate

"Qualified research consortium" is any qualifying

Arizona qualified research expenses for 4th

organization as defined in IRC § 41(b)(3)(C)(ii). Also

6th

and 5th taxable years is of aggregate

include 75 percent of that portion of line 1, basic

Arizona gross receipts for 4th and 5th

research payments paid to a qualified research

taxable years.

consortium that does not exceed the line 2 base amount.

1/3 of the percentage which the aggregate

Arizona qualified research expenses for 5th

7th

and 6th taxable years is of aggregate

Arizona gross receipts for 5th and 6th

taxable years.

1/2 of the percentage which the aggregate

Arizona qualified research expenses for 5th

8th

through 7th taxable years is of aggregate

Arizona gross receipts for 5th through 7th

taxable years.

Instructions For Arizona Form 308 - Research And Development Expenses Credit - 1999 Page 2

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