Form 500cr - Income Tax Credits - 2011 Page 13
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19PART K - RESEARCH AND DEVELOPMENT TAX
qualified investor. The investment cannot include debt. See §10-
CREDIT
725 of the Tax-General Article and Code of Maryland Regulations
24.05.03.
Businesses that incur qualified research and development expenses
in Maryland may be entitled to tax credits. The total of research and
For questions on application and certification processes or for
development credits for all businesses may not exceed $6,000,000
additional information on this credit program, contact:
per year.
Maryland Department of Business and Economic Development
There are two credits. The Basic Credit is 3% of the qualified
Division of Business Development, Tax Incentive Group
Maryland research and development expenses paid during the
401 E. Pratt St.
tax year, up to a base amount. The Growth Credit is 10% of the
Baltimore, MD 21202
Maryland research and development expenses paid during the tax
410-767-6438 or 410-767-4980
year that exceed the base amount.
Certification must be obtained from the Maryland Department of
Specific Requirements: The investor may claim the tax credit
Business and Economic Development (DBED) before the credit can
for the amount provided in the final certificate. If the credit amount
be claimed. The credit must be taken for the tax year in which the
exceeds the tax due, then a refund for the excess amount may be
expenses were incurred. Therefore, an amended return may need
claimed. The credit cannot be claimed until the date of issuance of
to be filed. A copy of the certification from DBED must be included
the final certificate. It must be claimed on the Maryland income tax
with the return.
return for the tax year in which the investor makes the investment
in the qualified Maryland biotechnology company.
Whenever this credit is claimed against the income tax, an addition
modification must be made for the tax year in which the research
Both the final certificate received from DBED and a statement of
and development expenses were paid.
affidavit (see below) as prepared by the investor are required to be
attached to the 500CR in order for the Biotechnology Investment
The credits are applicable to tax years beginning after December
Incentive Tax Credit to be allowed. Complete Form 500CR using
31, 1999 but before January 1, 2020.
the information provided in the final certificate and enter the amount
For certification and further information contact:
calculated from line 6 to line 2 of Part Y.
Maryland Department of Business and Economic Development
NOTE: If you are claiming a credit for more than one investment,
Division of Business Development Tax Incentives Group
a separate Form 500CR must be completed for each investment.
401 E. Pratt St.
Total the amount from each Form 500CR, Part L, line 6. Using only
Baltimore, MD 21202
one summary section, record the total on Form 500CR, Part Y, line
410-767-6438 or 410-767-4980
2. To claim the credit, you must attach each separate Form 500CR
to your income tax return.
Required Statement and Recapture of Credit The statement of
PART L - BIOTECHNOLOGY INVESTMENT INCENTIVE
affidavit must include the taxpayer identification number and name of
TAX CREDIT
the investor; signature of the investor under penalties of perjury (or its
General Requirements A credit is available for an investment in a
authorized representative); and date. The statement of affidavit must
qualified Maryland biotechnology company. To qualify, a company
stipulate that if, within 2 years after the close of the tax year for which
can be any entity of any form (except a sole proprietorship) that is
the credit is claimed, (1) the investor sells, transfers or disposes
duly organized and existing under the laws of any jurisdiction for
of the ownership interest in the qualified Maryland biotechnology
the purpose of conducting business for profit, and must be primarily
company, for which this tax credit was certified, or (2) the qualified
engaged in the research, development, or commercialization of
Maryland biotechnology company ceases operating as an active
innovative and proprietary technology that comprises, interacts with,
business with its headquarters and base of operations in Maryland,
or analyzes biological material including biomolecules (DNA, RNA, or
the investor shall give notice to the Comptroller by reporting the
protein), cells, tissues or organs. The biotechnology company must
applicable recapture amount on the investor’s Maryland tax return
have its headquarters and base of operations in Maryland; have
for the tax year in which the event causing the recapture occurred.
fewer than 50 full-time employees; have been in active business
The applicable recapture amount is calculated by multiplying the
no longer than 10 years (or 12 years if the Maryland Department
total amount of the credit claimed (or in the case of a sale, transfer
of Business and Economic Development (DBED) determines that
or other disposition of the ownership interest, the portion of the
the company requires additional time to complete the process
credit attributable to the ownership interest disposed of), by one of
of regulatory approval); have been certified as a biotechnology
the following percentages: 100%, if the event requiring recapture of
company by DBED; and must not have any securities publicly
the credit occurs during the taxable year for which the tax credit is
traded on any exchange. For fiscal year 2012 and 2013 only, the
claimed; 67%, if the event requiring recapture of the credit occurs
biotechnology company may be in active business for up to 15 years.
during the first year after the close of the taxable year for which the
The investor can be an individual or any entity (except a retirement
tax credit is claimed; or 33%, if the event requiring recapture of the
plan), and must make an investment of at least $25,000 in a qualified
credit occurs more than 1 year but not more than 2 years after the
Maryland biotechnology company (but not own more than 25% of
close of the taxable year for which the tax credit is claimed. The
the equity interests in the company after making the investment);
amount of recapture is entered onto line 5, part L.
must be required to file an income tax return in any jurisdiction;
In addition, an investor’s credit may be subject to a recapture if
and must apply for and receive final certification from DBED in
the certificate is rescinded by DBED due to the investor failing to
order to claim the Biotechnology Investment Incentive Tax Credit.
provide the required notice to DBED of having made the investment,
The amount of the credit is 50% of the investment in the qualified
or if DBED revokes the final certificate due to false representations
Maryland biotechnology company, not to exceed $250,000. The
made in connection with application for the certification. See Code
investment must be the contribution of money in cash or cash
of Maryland Regulations 24.05.03 for rescission and revocation
equivalents expressed in United States dollars, at risk of loss, to a
procedures.
qualified Maryland biotechnology company in exchange for stock,
a partnership or membership interest, or other ownership interest in
Pass-through entities If the credit is earned by an investor that is a
the equity of the company title to which ownership shall vest in the
PTE, the members of the PTE may claim the pro rata or distributive
11-49
Rev 9/12
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