Instructions For Arizona Form 308 - Credit For Increased Research Activities

Arizona Form 308

Line 6 -

Specific Instructions

Corporate taxpayers may be eligible for a "basic research"

Complete the name and employer identification number (EIN)

credit if their payments made in cash to a qualified university

section at the top of the form. Indicate the period covered by the

or scientific research organization (pursuant to a written

taxable year. Include the completed form with the tax return.

contract) for research conducted in Arizona exceed a base

period amount. Enter the amount of such payments on line 6.

All returns, statements, and other documents filed with the

department require a taxpayer identification number (TIN).

Line 7 -

The TIN for a corporation, an exempt organization with UBTI,

Enter the base period amount as defined by IRC § 41(e) that

an S corporation or a partnership is the taxpayer's EIN.

is based on Arizona research activity. The amount on line 7

Taxpayers that fail to include their TIN may be subject to a

(but not more than the amount on line 6), although not

penalty.

eligible for the basic research credit, can be treated as

Part 1 - Qualification for Refund of Current

contract research expenses on line 12.

Taxable Year's Excess Credit

Line 9 -

Enter total wages paid or incurred for qualified services

Line 1 -

performed in Arizona. Do not include the amount of such

If the taxpayer applied to Commerce and received a

wages paid to employees that were used in the calculation of

Certificate related to the credit for increased research

the federal work opportunity credit. Wages include any wages

activities, check the "Yes" box. Otherwise, check the "No"

paid or incurred to an employee for qualified services

box and skip line 2.

performed by such employee. Qualified services consist of

Line 2 -

engaging in qualified research or engaging in the direct

supervision or direct support of research activities that

If you checked the "Yes" box on line 1, enter the maximum refund

constitute qualified research.

amount for taxable year 2014 on your Certificate from Commerce.

Line 10 -

Line 3 -

Enter the cost of supplies paid or incurred for use in the

If an entity from which you are claiming a pass through credit

conduct of qualified research in Arizona. Supplies include

for increased research activities applied to Commerce and

expenditures for any tangible property other than land or

received a Certificate, check the "Yes" box. Otherwise, check

improvements to land, and property of a character subject to

the "No" box, and skip line 4 and line 5.

the allowance for depreciation.

If you checked the “No” box for both line 1 and line 3, skip

Line 11 -

Part 6.

Enter the amount paid or incurred to rent or lease the right to use

NOTE: By checking the “No” boxes for both line 1 and line 3,

computers in the conduct of qualified research in Arizona.

you are indicating that you will not seek a refund for this taxable

Line 12 -

year, and instead will carry any excess credit forward. This

election cannot be changed on an amended return.

Enter the total of:

(a) Seventy-five percent (.75) of any amount paid or

Line 4 -

incurred for qualified research performed in Arizona by a

If you checked the "Yes" box on line 3, enter the name and

qualified research consortium on the taxpayer's behalf.

EIN of the entity that received the Certificate from

"Qualified research consortium" is any qualifying

Commerce on line 4.

organization as defined in IRC § 41(b)(3)(C)(ii). Also

Line 5 -

include 75% of that portion of line 6, basic research

payments, paid to a qualified research consortium that

If you checked the "Yes" box on line 3, enter your share of

does not exceed the line 7 base amount.

the maximum refund amount for taxable year 2014, from

(b) Sixty-five percent (.65) of any amount paid or incurred

Part 4 of the S corporation’s Form 308 or Part 5 of the

for qualified research performed in Arizona on the

partnership’s Form 308.

taxpayer's behalf, other than such amounts paid to a

Only an exempt organization with UBTI would enter a pass-

qualified research consortium. Prepaid contract research

through amount from an S corporation on line 5.

expenses are considered paid in the year the research is

Part 2 - Current Taxable Year's Credit

actually done. Also include 65% of that portion of line 6,

basic research payments, that does not exceed the line 7

Calculation

base amount, other than amounts paid to a qualified

Lines 6 through 8 apply only to corporations (excluding

research consortium.

S corporations, personal holding companies, and service

NOTE: If you made basic research payments to an Arizona

organizations). All other taxpayers begin the computation

university under the jurisdiction of the Arizona Board of

on line 9.

Regents, you may be entitled to an additional credit. See

Arizona Form 346 for details.

Instructions For Arizona Form 308 - Credit For Increased Research Activities - 2014 Page 2

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