Montana Form Rsch - Increase Research And Development Activities Credit

Information about this form

For a small business corporation, partnership or limited

liability company that claims credit for increasing

Use form RSCH to calculate and claim a credit for

research activities, the credit must be attributed to

increasing the research and development activities

the individual shareholders, partners, members or

of your trade or business. To compute your tax credit,

managers in the same proportion that is used to

complete Parts I through III.

report income or loss for Montana tax purposes. The

Please note:

allocations in IRC § 41(f) do not apply.

•

You can claim a credit for only those research

My tax credit exceeds my income tax liability. Can

and development activities that are conducted in

the unused credit be carried back or forward to

Montana.

another tax year?

•

You must include a copy of the form that you ﬁ led

If the research credit cannot be used because of tax

with the Internal Revenue Service and supporting

liability limitations, it can be carried back two years and

documents in order to claim this credit.

carried forward up to ﬁ fteen years. The entire amount

•

Section references are to the Internal Revenue

of the credit that is not used in the year that it is earned

Code unless otherwise noted.

must be carried ﬁ rst to the earliest tax year in which

the credit can be applied and then to each succeeding

What are credits for Qualiﬁ ed Research Activities?

year. Please attach a schedule that documents any

“Qualiﬁ ed research activities” means research for

credit carryover.

which your expenditures can be treated as IRC §

174 expenses. Your research must be undertaken to

Instructions

discover information that is technological in nature.

Your intention for applying this research must be to

Part I

develop a new or improved business component. All of

Credit Calculation for Basic Research Payments

the elements of this research must relate to a new or

Line 1 - A corporation, individual, small business

improved function, performance, reliability or quality.

corporation, partnership or limited liability company is

For in-house research expenses, you may meet the

eligible for a “basic research” credit if the payments to

requirement if you incurred the expenses in carrying

a qualiﬁ ed university or scientiﬁ c research organization

on a trade or business where your principle purpose is

(under a written contract) exceed a base period

for conducting research and using the results of that

amount (based on general university giving and certain

research to actively conduct a future trade or business.

other maintenance-of-effort levels for three preceding

The following activities do not qualify for the research

years). Enter your payments for basic research

and development tax credit:

conducted in Montana on line 1. See IRC § 41(e) for

•

research conducted after commercial production

details.

has already begun

Line 2 - Enter the base period amount as deﬁ ned in

•

research that adapts an existing product or process

IRC § 41(e). Line 2 cannot exceed the amount on

to a particular customer’s needs

line 1.

•

duplication of an existing product or process

Part II

•

surveys or studies

Credit Calculation for Qualiﬁ ed Research Expenses

•

research that relates to a certain internal use of

Lines 4 through 7 - These lines pertain to qualiﬁ ed

computer software

research expenditures paid or incurred for research

•

research that is conducted outside of the State of

activities that were conducted in Montana. For multi-

Montana

state taxpayers, a by-state breakdown of wages,

supplies and qualiﬁ ed research expenses must be

•

research in the social sciences, arts or humanities

submitted with this form.

•

research that is funded by another person (or

Line 6 - See IRC § 41(b)(2)(A) for rules on leased

government entity)

property if the taxpayer received payments for the

See IRC § 41 for other deﬁ nitions concerning this tax

rental or lease of substantial identical property.

credit.

Line 7 - Include 65% (.65) of any amount that you

Who can claim this credit?

paid or incurred for qualiﬁ ed research performed on

A corporation, individual, small business corporation,

your behalf. Prepaid tract research expenses are

partnership, or limited liability company claiming

considered paid in the year that the research was

a credit for increasing research activities should

actually done. Also include 65% (.65) of that portion

complete this form and attach it to their tax return.

of line 1 basic research payments that does not

Montana Form Rsch - Increase Research And Development Activities Credit - 2008 Page 2

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