Instructions For Form 6765 - Credit For Increasing Research Activities

of the payroll tax credit election for the tax year). The

operator or primary user of the computer. Reduce this

$250,000 amount is allocated to each member of the group,

amount by the amount that you (or any member of a

regardless of whether all members of the group make the

controlled group of corporations or businesses under

payroll tax credit election, on a proportionate basis to each

common control) received or accrued for the right to use

member’s share of the aggregate of the qualified research

substantially identical property.

expenses taken into account for the tax year by the group for

Line 8

purposes of the credit.

Enter the amounts you paid or incurred, subject to the

Specific Instructions

following limitations.

100% of amounts you paid (or incurred) for qualified

energy research performed by an eligible small business, a

You can:

university, or a federal laboratory (see section 41(b)(3)(D) for

Claim the regular credit in Section A, or

definitions of those entities). Also include payments to those

Elect the alternative simplified credit in Section B.

same entities to the extent they are included as basic

You may want to figure your credit using both of the methods

research payments in line 2, not to exceed the base period

for which you are eligible to get the maximum credit allowed.

amount in line 3.

75% of amounts you paid (or incurred) for qualified

Once elected, the ASC applies to the current tax year and all

research by a qualified research consortium (as defined by

later years. A current tax year's ASC election may not be

section 41(b)(3)(C)(ii)). Also include 75% of the payments to

revoked. You may revoke the election for a later tax year by

a qualified research consortium to the extent they are

completing Section A relating to the regular credit and

included as basic research payments in line 2, not to exceed

attaching the Form 6765 to your timely filed (including

the base period amount in line 3.

extensions) original return for the year to which the

65% of amounts you paid (or incurred) for all other

revocation applies. See Regulations section 1.41-9(b)(3).

qualified research by any other person. Also include 65% of

After figuring your credit, you can elect to treat a portion of

the payments to that person to the extent they are included

the credit as a payroll tax credit. Complete Section D to

as basic research payments in line 2, not to exceed the base

determine the payroll tax credit portion. Taxpayers other than

period amount in line 3.

partnerships and S corporations must complete Form 3800

Note. Prepaid contract research expenses are considered

before completing Section D.

paid in the year the research is actually done.

Section A—Regular Credit

Line 10

Skip this section and go to Section B if:

The fixed-base percentage depends on whether you are an

1. You are electing the alternative simplified credit, or

existing company or a start-up company.

2. You previously elected the alternative simplified credit

and are not revoking the election on this return.

A start-up company is a taxpayer that had both gross

receipts and qualified research expenses either:

Enter the amounts you paid or incurred to energy research

For the first time in a tax year beginning after 1983, or

consortia for energy research. Energy research does not

For fewer than 3 tax years beginning after 1983 and before

include any research that is not qualified research. In

1989.

general, an energy research consortium is any organization

described in section 501(c)(3), exempt from tax under

The fixed-base percentage for a start-up company is

section 501(a), organized and operated primarily to conduct

figured as follows.

energy research, and not a private foundation. See section

For the first 5 tax years beginning after 1993 for which you

41(f)(6) for further details.

have qualified research expenses, the percentage is 3%.

Line 1

For the 6th tax year beginning after 1993 for which you

have qualified research expenses, divide the aggregate

Any amount included on line 1 cannot be included elsewhere

qualified research expenses for the 4th and 5th such tax

on the return.

years by the aggregate gross receipts for those tax years,

then divide the result by 6.

Line 2

For the 7th tax year beginning after 1993 for which you

Enter the amounts the corporation (not to include S

have qualified research expenses, divide the aggregate

corporations, personal holding companies, and service

qualified research expenses for the 5th and 6th such tax

organizations) paid in cash, under a written contract, for

years by the aggregate gross receipts for those tax years,

basic research to a qualified university, scientific research

then divide the result by 3.

organization, or grant organization. See section 41(e) for

For the 8th tax year beginning after 1993 for which you

details, including the definitions of qualified organizations.

have qualified research expenses, divide the aggregate

qualified research expenses for the 5th, 6th, and 7th such tax

Line 3

years by the aggregate gross receipts for those tax years,

Enter the qualified organization base period amount based

then divide the result by 2.

on minimum basic research amounts plus

For the 9th tax year beginning after 1993 for which you

maintenance-of-effort amounts for the 3 preceding tax years.

have qualified research expenses, divide the aggregate

See section 41(e) for details.

qualified research expenses for the 5th, 6th, 7th, and 8th

such tax years by the aggregate gross receipts for those tax

Line 7

years, then divide the result by 1.5.

Enter the amount you paid or incurred for the rental or lease

For the 10th tax year beginning after 1993 for which you

of computers used in qualified research. The computer must

have qualified research expenses, divide the aggregate

be located off your premises and you must not be the

qualified research expenses for the 5th through 9th such tax

-3-

Instructions for Form 6765 (2016)

Instructions For Form 6765 - Credit For Increasing Research Activities - 2016 Page 3

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