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Instructions for Form 8942

Department of the Treasury

Internal Revenue Service

(June 2010)

Application for Certification of Qualified Investments Eligible for Credits and

Grants Under the Qualifying Therapeutic Discovery Project Program

below). The amount that is treated as

directly related to the conduct of a

Section references are to the Internal

qualified investment shall not exceed the

qualifying therapeutic discovery project.

Revenue Code unless otherwise noted.

amount certified by the IRS as eligible for

The IRS will not certify more than $10

the QTDP credit.

General Instructions

million as a qualified investment for any

single applicant and no applicant will be

Qualifying Therapeutic

allocated more than $5 million in QTDP

Purpose of Form

Discovery Project

credits or grants in the aggregate for 2009

A qualifying therapeutic discovery project

and 2010, regardless of the number of

Use Form 8942 to apply, under the

is a project that is designed to:

projects the applicant sponsors.

Qualifying Therapeutic Discovery Project

(QTDP) Program, for:

1. Treat or prevent diseases or

The amount that is treated as qualified

•

Certification of qualified investments

conditions by conducting pre-clinical

investment for all tax years for any

eligible for a QTDP credit, and

activities, clinical trials, and clinical

qualifying therapeutic discovery project

•

A grant in lieu of the QTDP credit.

studies, or carrying out research

may not exceed the amount certified by

A separate Form 8942 must be filed for

protocols, for the purpose of securing

the IRS as eligible for the QTDP credit.

each project for which the applicant is

approval of a product under section

Employees described in section

requesting certification.

505(b) of the Federal Food, Drug, and

162(m)(3). The following employees are

Cosmetic Act or section 351(a) of the

described in 162(m)(3).

Definitions

Public Health Service Act;

•

The chief executive officer (or individual

2. Diagnose diseases or conditions or

acting in that capacity) of any applicant as

Qualifying Therapeutic

to determine molecular factors related to

of the end of the tax year.

Discovery Project Program

diseases or conditions by developing

•

An employee whose total

molecular diagnostics to guide

Under the Patient Protection and

compensation for the tax year is required

therapeutic decisions; or

Affordable Care Act (Public Law

to be reported to shareholders under

3. Develop a product, process, or

111-148), the IRS and the Department of

Securities Exchange Act of 1934 because

technology to further the delivery or

Health and Human Services (HHS) have

the employee is among the three highest

administration of therapeutics.

established the qualifying therapeutic

compensated officers for the tax year

discovery project program in accordance

(other than the principal executive officer

with Notice 2010-45 to consider and

Each project will be evaluated by

or the principal financial officer).

award certifications for qualified

itself without reference to other

For more information on employees

investments eligible for the credit to

projects. Therefore, dividing a

described in section 162(m)(3), see

CAUTION

qualifying therapeutic discovery project

project into multiple projects may result in

Notice 2007-49, 2007-25 I.R.B. 1429,

sponsors. An eligible taxpayer may apply

the projects not meeting the selection

available at

for certification from the IRS of a qualified

criteria under section 48D(d)(3).

2007-25_IRB/ar01.html

investment with respect to a qualifying

Facility maintenance expenses.

Qualified Investment

therapeutic discovery project as eligible

Facility maintenance expenses are costs

for a credit, or for certain applicants, a

Generally, a qualified investment is the

paid or incurred to maintain a facility,

grant under the program. The IRS will

aggregate amount of the costs paid or

including:

consult with HHS in conducting this

•

incurred in a tax year beginning in 2009

Mortgage or rent payments,

program. The total amount of qualified

•

or 2010 for expenses necessary for and

Insurance payments,

investments that will be certified by the

•

directly related to the conduct of a

Utility and maintenance costs, and

IRS for all applicants under the qualifying

•

qualifying therapeutic discovery project.

Costs of employment of maintenance

therapeutic discovery project program will

personnel.

An investment will be considered a

not exceed $2 billion. The total amount of

Qualified progress expenditures. For

qualified investment only if it is made in a

credits that may be allocated and grants

costs paid for property subject to

that may be paid will not exceed $1

tax year beginning in 2009 or 2010.

depreciation, rules similar to rules of

billion.

Qualified investment does not include the

section 46(c)(4) and (d) (as in effect on

following costs.

For more information on the Qualifying

•

the day before the date of enactment of

Remuneration for any employee

Therapeutic Discovery Project Program,

the Revenue Reconciliation Act of 1990)

described in section 162(m)(3).

see Notice 2010-45, 2010-23 I.R.B. 734,

•

apply. For more information, see Qualified

Interest expenses.

available at

•

Progress Expenditures in the Instructions

Facility maintenance expenses (defined

2010-23_IRB/ar08.html.

for Form 3468.

below).

•

A cost identified as a service cost

At-risk limit for individuals and closely

Qualifying Therapeutic

under Regulations section 1.263A-1(e)(4).

held corporations. The cost or basis of

Discovery Project Credit

•

Any investment for which bonus

depreciable property included in qualified

depreciation is allowed under section

The QTDP credit is part of the investment

investment for the QTDP credit or grant

168(k), 1400L(b)(1), or 1400N(d)(1).

credit for tax years beginning in 2009 or

may be limited if you borrowed against

•

Any other expense determined by the

2010. The QTDP credit for any tax year is

the property and are protected against

IRS.

an amount equal to 50 percent of the

loss, or if you borrowed money from a

Reduce qualified investment by the

qualified investment (defined below) for

person who is related or who has an

amount of any grant excluded from gross

that tax year with respect to any qualifying

interest (other than as a creditor) in the

income, unless the grant can only be

therapeutic discovery project (defined

business activity. The cost or basis must

used for costs not necessary for and

below) of an eligible taxpayer (defined

be reduced by the amount of the

Cat. No. 55145S

Instructions For Form 8942 - Application For Certification Of Qualified Investments Eligible For Credits And Grants Under The Qualifying Therapeutic Discovery Project Program

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