Form 306 - Research And Development Tax Credit - New Jersey Corporation Business Tax - 2012 Page 4
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4Start-up companies - For tax years beginning before January 1, 1994,
PART III
the fixed-base percentage is 3% if you have fewer than 3 taxable years
TOTAL RESEARCH AND DEVELOPMENT TAX CREDIT
beginning after December 31, 1983 and before January 1, 1989, in which
The total research and development tax credit available on line 18 is
you had both gross receipts and qualified research expenses. If the
one of several credits that are allowed under the Corporation Business
percentage computation involves de minimis amounts of gross receipts
Tax Act. Complete Part IV to determine the amount of credit allowable for
and qualified expenses in a tax year or short tax years are involved, see
the current tax period.
I.R.C. 41(c)(3) and 41(f)(4).
For tax years beginning after December 31, 1993, the fixed-base
percentage is 3% for each of the first five tax years for which there were
PART IV
qualified research expenses. However, the fixed-base percentage for the
sixth through tenth years after 1993 in which qualified research expenses
CALCULATION OF THE ALLOWABLE CREDIT AMOUNT
are incurred is a portion of the percentage (rounded to 1/100th of one
a) The allowable research and development tax credit is calculated in
percent) which qualified research expenses bear to gross receipts
Part IV. The amount of this credit in addition to the amount of any
everywhere for specified preceding years as follows:
other tax credits taken is limited to 50% of the taxpayer’s total tax
liability and cannot exceed an amount which would reduce the total
1. for the sixth year, one-sixth of the percentage which qualified
tax liability below the statutory minimum.
research expenses bear to gross receipts everywhere for its fourth
and fifth years;
b) The minimum tax is assessed based on the New Jersey Gross
Receipts as follows:
2. for the seventh year, one-third of the percentage which qualified
New Jersey Gross Receipts
CBT-100
CBT-100S
research expenses bear to gross receipts everywhere for the fifth
Less than $100,000
$500.00
$375.00
and sixth years;
$100,000 or more but less than $250,000
$750.00
$562.00
$250,000 or more but less than $500,000
$1,000.00
$750.00
3. for the eighth year, one-half of the percentage which qualified
$500,000 or more but less than $1,000,000 $1,500.00 $1,125.00
research expenses bear to gross receipts everywhere for its fifth
$1,000,000 or more
$2,000.00 $1,500.00
through seventh years;
provided however that for a taxpayer that is a member of an
4. for the ninth year, two-thirds of the percentage which qualified
affiliated or controlled group which has a total payroll of $5,000,000
research expenses bear to gross receipts everywhere for its fifth
or more for the return period, the minimum tax shall be $2,000. Tax
through eighth years; and
periods of less than 12 months are subject to the higher minimum
tax if the prorated total payroll exceeds $416,667 per month.
5. for the tenth year, five-sixths of the percentage which qualified
research expenses bear to gross receipts everywhere for its fifth
c) The priorities set forth in this Corporation Business Tax form follow
through ninth years.
Regulation N.J.A.C. 18:7-3.17.
For subsequent tax years, the taxpayer’s fixed-base percentage will
PART V
be the whole percentage which qualified research expenditures bear to
gross receipts everywhere for any five years selected by the taxpayer
RESEARCH AND DEVELOPMENT TAX CREDIT CARRYOVER
from the fifth through tenth tax years.
Although there is a limitation of the amount of credit allowed in any
NOTE: The maximum percentage that can be entered on line 9 is 16%.
one tax year, generally the amount of unused tax credit may be carried
forward to each of the seven (7) accounting years following the credit’s
Line 10 - Enter the average annual gross receipts everywhere for the four
tax year. (N.J.S.A. Sec. 54:10A-5.24, ¶95-880u).
tax years preceding the tax year for which the credit is being determined
(called the credit year). The taxpayer may be required to annualize gross
A taxpayer that has been allowed a research and development credit
receipts for any short tax year. See I.R.C. 41(c)(1)(B) and 41(f)(4).
for the fiscal or calendar accounting period (tax year) in which the
qualified research expenses have been incurred, and basic research
For purposes of lines 9 and 10, reduce gross receipts everywhere for
payments have been made, for research conducted in New Jersey in the
any tax year by returns and allowances made during the tax year. In the
fields of advanced computing, advanced materials, biotechnology,
case of a foreign corporation, include only gross receipts that are
electronic device technology, environmental technology, and medical
effectively connected with the trade or business within the United States.
device technology, are allowed to carry over the amount of the tax year
credit that could not be applied for the tax year to each of the 15 tax years
Line 13 - The base amount cannot be less than 50% (.50) of the current
following the credit’s tax year.
(N.J.S.A. Sec. 54:10A-5.24b, ¶95-
year qualified research expenses. The rule applies to existing and newly
880v(1)).
organized businesses.
Form 306-A (09-12, R-13)
Page 2
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