Instructions For Arizona Form 308 - Research And Development Expenses Credit

Arizona Form 308

Computation of Excess Qualified Research Expenses

used.

Subject to Carryforward

Column (d): Enter the available carryover of excess

Maximum allowable credit (BRP of $180,000

$ 250,000.00 **

qualified research expenses for each taxable year (subtract

+ QRE of $70,000)

column (c) from column (b)). Then, add the amounts entered

** Basic research payments of $180,000 ($900,000 x .20 = $180,000) +

in column (d) of lines 52 through 66. Enter the total on line

Qualified research expenses of $2,593,455 [($80,000 x .0165 = $1,320)

67, column (d).

+ ($80,000 x .022 = $1,760) + ($2,433,455 x .0275 = $66,920)]

Qualified research expenses in excess of

Part VI - Total Available Credit

base amount [excess BRP of $900,000 +

$ 4,310,000.00

excess QRE of $3,410,000 ($3,570,000 –

Complete this section to compute the total available credit

$160,000)]

for the taxable year. The total available credit is the sum of

Qualified research expenses used to

the credit for current taxable year qualified research

3,493,455.00

compute maximum allowable credit

expenses and the credit for carryover of excess qualified

QRE in excess of maximum allowable credit

816,545.00

research expenses.

Corporation R has $816,545 of excess qualified research expenses in

Line 69 -

the taxable year ending July 31, 2000, that are available to be carried

Complete this line only if the amount entered on line 68 is

forward for use in computing the maximum allowable credit in

less than the maximum allowable credit for the current

succeeding taxable years.

taxable year. The amount entered on line 69 cannot exceed

Line 49 -

the amount of expenses required to compute a credit equal to

the difference between the credit amount on line 68 and the

Enter the qualified research expenses in excess of the base

maximum credit for the current taxable year.

amount. This is the total of the amount from Part II, line 21,

and the amount from Part II, line 39, less the total of the

The following examples illustrate the computation of the

amount from Part II, line 32, and the amount from Part II,

amount to be entered on this line.

line 37.

•

Taxpayers using the standard credit computation

Line 50 -

should compute the amount to enter on line 69

according to example 1.

Enter the total qualified research expenses used to compute

•

the maximum allowable credit for the current taxable year.

Taxpayers using the alternative credit computation

should compute the amount to enter on line 69

Line 51 -

according to example 2.

Subtract the amount on line 50 from the amount on line 49.

EXAMPLE 1 (standard credit computation)

Enter the difference. This is the amount of excess qualified

research expenses for

the current taxable year that is

Taxpayer F, a fiscal year basis taxpayer, has a $700,000

available to be carried forward by the taxpayer.

carryover of excess qualified research expenses from its 1998

taxable year. The credit amount on line 68 (for the 1999

Part V - Available Carryover of Excess

taxable year) is $150,000. This is the second taxable year in

Qualified

Research

Expenses

From

Prior

which taxpayer F is claiming the credit and, therefore, the

Taxable Years

maximum credit is $250,000.

Qualified research expenses that exceed the maximum

Taxpayer F may only use the amount of expenses required to

allowable credit in a taxable year may be carried forward for

compute a credit equal to the difference between the credit

not more than 15 taxable years. Complete this section to

amount on line 68 and the maximum credit for the taxable

compute the available carryover of excess qualified research

year. Therefore, taxpayer F may only use $500,000 of its

expenses from prior taxable years.

$700,000 carryover from the 1998 taxable year. This is the

amount of expenses required to compute a credit of $100,000

Calculate the total available carryover of excess qualified

($500,000 X .20 = $100,000), which is equal to the

research expenses in Part V, lines 52 through 67. Complete

difference between the credit amount on line 68 ($150,000)

these lines, as applicable, if the taxpayer claimed the credit

and the maximum credit for the taxable year ($250,000).

on a prior taxable year's tax return and had excess qualified

research expenses.

EXAMPLE 2 (alternative credit computation)

Column (a): Enter the applicable taxable year(s) on lines 52

Taxpayer H, a fiscal year basis taxpayer, has a $3,900,000

through 66.

carryover of excess qualified research expenses from its 1998

taxable year. The credit amount on line 68 (for the 1999

Column (b): Enter the amount of excess qualified research

taxable year) is $150,000. This is the second taxable year in

expenses for each taxable year on lines 52 through 66.

which taxpayer H is claiming the credit and, therefore, the

Column (c): Enter the amount of excess qualified research

maximum credit is $250,000.

expenses for each taxable year which has been previously

Instructions For Arizona Form 308 - Research And Development Expenses Credit - 1999 Page 7

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