Form Rsch - Increase Research And Development Activities Credit - Montana Department Of Revenue - 2010 Page 3
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3exceed the line 2 base amount. See IRC § 41(e)(1)
•
for the ninth year, two-thirds of the percentage
(B). However use 75% (.75) in place of 65% (.65) for
which qualified research expenses bear to gross
payments made to a qualified research consortium.
receipts everywhere for its fifth through eighth
A qualified research consortium is a tax-exempt
years
organization described in section 501(c)(3) or 501(c)
•
for the tenth year, five-sixths of the percentage
(6) that is organized and operated primarily to conduct
which qualified research expenses bear to gross
scientific research and is not a private foundation.
receipts everywhere for its fifth through ninth years
Line 9. Compute the fixed-base percentage as
For subsequent tax years, the taxpayer’s fixed-base
follows: The fixed-base percentage for an existing
percentage will be the whole percentage which
company (any company that is not a start-up company)
qualified research expenditures bear to gross receipts
is calculated by dividing the aggregate qualified
everywhere for any five years selected by the taxpayer
research expenses for tax years beginning after 1983
from the fifth through tenth tax years.
and before 1989 by the aggregate gross receipts for
The maximum percentage that can be entered on line
those tax years. For multistate taxpayers, a by-state
9 is 16% (0.16).
breakdown of gross receipts is required. The allocation
Line 10. Enter the average Montana annual gross
of sales to Montana in the by-state breakdown must
receipts for the four tax years preceding the tax year
conform to 15-31-311, MCA. Round off the percentage
for which the credit is being determined (called the
to the nearest 1/100 of 1% (0.0001) (i.e. four decimal
credit year). You may be required to annualize your
places).
gross receipts for any short tax year. See IRC § 41(c)
Start up companies - A start up company is a taxpayer
(1)(B) and 41(f)(4).
that had both gross receipts and qualified research
For purposes of lines 9 and 10, reduce Montana gross
expenses either:
receipts everywhere for any tax year by returns and
•
for the first time in a tax year beginning after 1983,
allowances made during the tax year. In the case of a
or
foreign corporation, include only gross receipts that are
•
for less than three tax years beginning after 1983
effectively connected with the trade or business within
and before 1989.
the United States.
For tax years beginning before January 1, 1994, the
Line 13. The base amount cannot be less than 50%
fixed-base percentage is 3% (0.03) if you have fewer
(0.50) of the current year qualified research expenses.
than three taxable years beginning after December 31,
The rule applies to existing and newly organized
1983 and before January 1, 1989, in which you had
businesses.
both gross receipts and qualified research expenses.
Part III
If the percentage computation involves insignificant
Total Research and Development Tax Credit
amounts of gross receipts and qualified expenses in
a tax year or short tax years are involved, see IRC §
Enter line 18 on Form 2, Schedule V, for individuals;
41(c)(3) and 41(f)(4).
Form PR-1, Schedule II, for partnerships; Form
CLT-4S, Schedule II, for S corporations; or to Form
For tax years beginning after December 31, 1993, the
CLT-4, Schedule C, for C corporations.
fixed-base percentage is 3% (0.03) for each of the first
five tax years for which there were qualified research
Questions? Please call us toll free at (866) 859-2254
expenses. However, the fixed-base percentage for
(in Helena, 444-6900).
the sixth through tenth years after 1993 in which the
percentage (rounded to 1/100 of 1% (0.0001)) which
qualified research expenses bear to gross receipts
everywhere for specified preceding years as follows:
•
for the sixth year, one-sixth of the percentage
which qualified research expenses bear to gross
receipts everywhere for its fourth and fifth years
•
for the seventh year, one-third of the percentage
which qualified research expenses bear to gross
receipts everywhere for its fifth through sixth years
•
for the eighth year, one-half of the percentage
which qualified research expenses bear to gross
receipts everywhere for its fifth through seventh
years
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