Montana Form Rsch - Increase Research And Development Activities Credit

exceed 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 years

company (any company that is not a start-up company)

For subsequent tax years, the taxpayer’s ﬁ xed-base

is calculated by dividing the aggregate qualiﬁ ed

percentage will be the whole percentage which

research expenses for tax years beginning after 1983

qualiﬁ ed research expenditures bear to gross receipts

and before 1989 by the aggregate gross receipts for

everywhere for any ﬁ ve years selected by the taxpayer

those tax years. For multistate taxpayers, a by-state

from the ﬁ fth through tenth tax years.

breakdown of gross receipts is required. The allocation

The maximum percentage that can be entered on line

of sales to Montana in the by-state breakdown must

9 is 16% (0.16).

conform to 15-31-311, MCA. Round off the percentage

Line 10 - Enter the average Montana annual gross

to the nearest 1/100 of 1% (0.0001) (i.e. four decimal

receipts for the four tax years preceding the tax year

places).

for which the credit is being determined (called the

Start up companies - A start up company is a taxpayer

credit year). You may be required to annualize your

that had both gross receipts and qualiﬁ ed research

gross receipts for any short tax year. See IRC § 41(c)

expenses either:

(1)(B) and 41(f)(4).

•

for the ﬁ rst time in a tax year beginning after 1983,

For purposes of lines 9 and 10, reduce Montana gross

receipts everywhere for any tax year by returns and

•

for less than three tax years beginning after 1983

allowances made during the tax year. In the case of a

and before 1989.

foreign corporation, include only gross receipts that are

For tax years beginning before January 1, 1994, the

effectively connected with the trade or business within

ﬁ xed-base percentage is 3% (0.03) if you have fewer

the United States.

than three taxable years beginning after December 31,

Line 13 - The base amount cannot be less than 50%

1983 and before January 1, 1989, in which you had

(0.50) of the current year qualiﬁ ed research expenses.

both gross receipts and qualiﬁ ed research expenses.

The rule applies to existing and newly organized

If the percentage computation involves insigniﬁ cant

businesses.

amounts of gross receipts and qualiﬁ ed expenses in

Part III

a tax year or short tax years are involved, see IRC §

41(c)(3) and 41(f)(4).

Total Research and Development Tax Credit

For tax years beginning after December 31, 1993, the

Transfer line 18 to Form 2, Schedule V, for individuals;

ﬁ xed-base percentage is 3% (0.03) for each of the ﬁ rst

Form PR-1, Schedule II, for partnerships; Form

ﬁ ve tax years for which there were qualiﬁ ed research

CLT-4S, Schedule II, for S corporations; or to Form

expenses. However, the ﬁ xed-base percentage for

CLT-4, Schedule C, for C corporations.

the sixth through tenth years after 1993 in which the

percentage (rounded to 1/100 of 1% (0.0001)) which

Mail to:

qualiﬁ ed research expenses bear to gross receipts

Montana Department of Revenue

everywhere for speciﬁ ed preceding years as follows:

PO Box 5805

•

for the sixth year, one-sixth of the percentage

Helena, MT 59604-5805

which qualiﬁ ed research expenses bear to gross

If you have questions, please call us toll free at

receipts everywhere for its fourth and ﬁ fth years

(866) 859-2254 (in Helena, 444-6900).

•

for the seventh year, one-third of the percentage

which qualiﬁ ed research expenses bear to gross

receipts everywhere for its ﬁ fth through seventh

years

•

for the eighth year, one-half of the percentage

which qualiﬁ ed research expenses bear to gross

Montana Form Rsch - Increase Research And Development Activities Credit - 2008 Page 3

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