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


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).
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
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).
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
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
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
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
for Form 3468.
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
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


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