Form Rdf-Ct - Application To Be Considered A Research And Development Firm Page 2
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1
2Instructions for Form RDF-CT
Purpose of This Form
development activities during its first five taxable years of
activity in Montana. The “taxable year” means a research
The form serves two purposes. It is used by new
and development firm’s taxable period for federal income
corporations created to engage in business in Montana to
tax purposes.
apply for classification as a research and development firm.
• Income which is unrelated to research and development
It is also used annually by firms that already have been
activities earned by a research and development firm is
classified as research and development firms to identify
not eligible for the five-year income exemption from the
their research and development property that qualifies for
Montana corporate income tax. (ARM 42.23.116)
“class 5” classification for property tax purposes.
• For the purpose of calculating or otherwise determining
Application Filing Requirements
the period for which a deduction, exclusion, exemption,
or credit may be taken, we will disregard a research
• This application must be filed with us before the end of
and development firm’s first five taxable years of activity
the first calendar quarter of the taxable year that you
in Montana and administer the deduction, exclusion,
engage in business in Montana.
exemption, or credit as if the corporation did not
• When we receive your timely application,
exist during those taxable years. This treatment of a
(15-31-103(2)(c), MCA), we will evaluate it to make sure
research and development firm extends to net operating
that it contains all of the information required by 15-31-
loss carryback and net operating loss carryforward
103(2)(b), MCA. If your application was timely filed, and
provisions.
contains all required information, we will send you a
letter confirming this designation.
Property Tax Classification (15-6-135, MCA)
• If you do not properly complete this form or file within
• If you qualify as a research and development firm,
the time allowed, you will automatically be disqualified
all land and improvements and all personal property
from being designated and treated as a research and
that you own that is actively devoted to research and
development firm.
development will be considered “class five property” for
• The director of the Department of Revenue may
purposes of property tax classification.
grant you an extension of time to file an application
• In order to qualify for the class five property
for treatment as a research and development firm. To
classification, you must file this form annually with the
receive this extension, you must submit a request for the
department on or before January 1 of the year that
extension in writing. When doing so, the new deadline
you desire the classification. Through our business
that you are requesting for submitting the application
and income taxes division, we will certify the eligibility
cannot extend beyond 30 days from the date the
of your class five research and development property
application was required to be filed.
classification.
• ARM Section 42.23.115 states that in order for a firm to
Mail to: Montana Department of Revenue
qualify as a research and development firm, more than
Corporation Tax Unit
50% of the real and tangible personal property located
PO Box 7149
in Montana and more than 50% of its Montana payroll
Helena, MT 59604-7149
must be directly related to research and development
activities.
Questions? Please call us toll free at (866) 859-2254 (in
Helena, 444-6900).
• A corporation that is created through the reorganization
of a corporation currently operating in Montana is not
eligible for the research and development tax benefits if
the newly created research and development subsidiary
is essentially continuing current and past activities of
the parent in Montana. If the newly created corporation
is carrying on new research and development activities
separate and distinct from the operations of the
parent, the corporation will be eligible for tax benefits.
(ARM 42.23.114)
Exemption from Income Tax and Alternative
Income Tax (15-31-103, MCA)
• An eligible research and development firm that is
organized to engage in business in the state of Montana
for the first time is not subject to any of the taxes
imposed on net income earned from research and
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