Instructions For Arizona Form 308 - Credit For Increased Research Activities - 2014

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Arizona Form
2014 Credit for Increased Research Activities
308
 The termination provisions of IRC § 41 do not apply.
CONTACTS
FOR
REFUND
OF
CREDIT
FOR
INCREASED RESEARCH ACTIVITIES
: If two or more members of a unitary
CORPORATE TAXPAYERS
group or an Arizona affiliated group incur qualifying
Arizona Commerce Authority
expenses, the individual members of the group are not
Application forms Program guidelines
considered separate taxpayers. When a combined return or a
Website:
consolidated return is filed, the unitary group or the Arizona
affiliated group is considered a single taxpayer.
Program Manager
(602) 845-1200
The credit is available to an exempt organization that is
CONTACTS FOR NONREFUNDABLE CREDIT FOR
subject to corporate income tax on UBTI. The credit must
INCREASED RESEARCH ACTIVITIES
result from the activities that generate UBTI.
Arizona Department of Revenue
75%
'
REFUND OF
OF CURRENT YEAR
S EXCESS CREDIT
Tax forms and instructions Information and assistance
If the current taxable year's credit for increased research
activities exceeds your income tax liability for the taxable year, a
Website:
portion of the excess credit may be refundable, if you qualify.
Taxpayer assistance
(602) 255-3381
The amount of credit that is refundable is limited to 75% of
From area codes 520 and 928, toll-free
(800) 352-4090
the excess credit. The excess credit is the current year's credit
less the current year's tax liability. The 75% refund is only
General Instructions
available for the current year's excess credit for increased
research activities. Once the taxpayer files a return with the
NOTE:
2014 F
308
department, the excess credit for increased research activities
THE
ORM
IS USED BY TAXPAYERS THAT ARE
, E
is carried forward; therefore, the taxpayer may not claim a
CORPORATIONS
XEMPT ORGANIZATIONS WITH UNRELATED
(UBTI), S
refund for that taxable year.
BUSINESS TAXABLE INCOME
CORPORATIONS OR
. I
2014
PARTNERSHIPS
NDIVIDUAL TAXPAYERS MUST USE THE
NOTE: Because the refund is calculated after tax liability, it is
F
308-I.
ORM
necessary that you calculate all of your other credits before you
Arizona Revised Statutes (A.R.S.) § 43-1168 provides a
can determine the current year's excess credit amount.
corporate income tax credit for increased research activities in
Taxpayers must apply to the Arizona Commerce Authority
a taxable year; a portion of the current year's excess credit may
(Commerce) and receive a Certificate of Qualification (Certificate)
be refundable to qualified taxpayers.
to receive a refund. Taxpayers must have less than 150 full-time
The credit for increased research activities is in lieu of the solar
employees to qualify. The refund is the lesser of (a) 75% of the
liquid fuel credit, provided by A.R.S. § 43-1164.02 (claimed
excess credit; or (b) the maximum refund on the Certificate from
on Arizona Form 344), with respect to the same expenses.
Commerce. Any additional amount is waived.
The Arizona corporate tax credit is allowed in an amount
If two or more taxpayers, including shareholders of an
computed pursuant to Internal Revenue Code (IRC) § 41 with
S corporation and partners in a partnership, share in the eligible
the following exceptions:
expenses, each taxpayer is eligible to claim a proportionate share
 Qualified research includes only research conducted in
of the refund. An S corporation must apply for the Certificate on
Arizona. The term "qualified research," for purposes of the
behalf of its shareholders. A partnership must apply for the
Certificate on behalf of its partners.
Arizona tax credit, means qualified research, as defined in
IRC § 41, that is conducted in Arizona and basic research, as
CARRYOVER OF UNUSED CREDIT
defined in IRC § 41, which is conducted in Arizona.
If the current taxable year's credit exceeds the taxpayer’s tax
 The amount of the credit is based on the federal regular
liability for the taxable year, the taxpayer may carry forward the
credit computation method for Arizona qualified research
unused credit to the next fifteen consecutive taxable years. Due to
expenses and Arizona basic research payments. Taxpayers
various law changes, the amount that may be carried forward and
use the federal alternative credit computation
CANNOT
how it is applied differs depending on the tax year it was earned.
method. The allowable current taxable year credit is a
Please see the specific instructions for more information on how to
percentage of (a) the excess, if any, of the Arizona qualified
calculate the proper carryforward amounts.
research expenses for the taxable year, over the base
NOTE: Taxpayers that elected to receive a refund of 75% of
amount; and (b) the Arizona basic research payments.
the excess credit cannot carry forward any amount from the
For 2014, if the allowable expenses do not exceed
year of the refund. Carry forwards from years prior to 2010 or
$2,500,000, the allowable credit is 24% of this amount. If the
years where the taxpayer did not elect to receive a refund
allowable expenses exceed $2,500,000, the allowable credit
may carryover to the following year.
amount is $600,000 plus 15% of the amount of expenses
If you qualify to receive a refund for this taxable year,
over $2,500,000, subject to certain limitations.
carryovers of the credit for increased research activities from
 If two or more taxpayers, including shareholders of an
previous taxable years will be carried over to the following
S corporation and partners in a partnership, share in the
taxable year, subject to the fifteen year carryover period and
eligible expenses, each taxpayer is eligible to receive a
annual limitations on use of those carryovers.
proportionate share of the credit.

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