Instructions For Form 344 - Arizona Solar Liquid Fuel Credit

Arizona Form 344

Part 2 - S Corporation Credit Election and

If 2014 is the first year the taxpayer is in business, the average

annual Arizona gross receipts for the preceding taxable years is

Shareholder's Share of Credit

zero. If the taxpayer has been in business in Arizona for less than

Line 15 - S Corporation Credit Election

four taxable years prior to the credit year, then the average is the

sum of annual Arizona gross receipts of the applicable period,

S corporations must complete line 15. The S corporation must

divided by the number of taxable years.

make an irrevocable election to either claim the current

Example: ABC Corporation began business in Arizona in

taxable year credit or pass the credit through to its

2012. Its annual Arizona gross receipts for 2012 were

shareholders. The election statement must be signed by one

$100,000. Its annual Arizona gross receipts for 2013 were

of the officers of the S corporation who is also a signatory to

$200,000. Therefore, ABC Corporation’s average annual

Arizona Form 120S. If the S corporation elects to claim the

Arizona gross receipts for the 2014 credit year is $150,000

credit itself, it can skip lines 16 through 18 and complete

([$100,000 plus $200,000] divided by 2).

Part 4.

Line 9 -

Lines 16 through 18 -

Fixed base percentage

If an S corporation elects to pass the credit through to its

Use the same type of formulas to compute your fixed-base

shareholders, it must also complete lines 16 through 18.

percentage for Arizona as you would for computing your

federal fixed-base percentage. The difference is that you use

After the S corporation completes Part 1, it must complete

Arizona qualified research expense and gross receipts amounts

Part 2, lines 16 through 18, separately for each shareholder.

instead of federal amounts. Other than that, the calculations

The S corporation must furnish each shareholder with a copy

are the same. Round off the percentage to the nearest one,

of Form 344. Each shareholder must complete Part 4.

one hundredth of one percent (four decimal places).

NOTE: Taxpayers who are partners or shareholders in

If the percentage computation involves de minimis amounts

multiple entities receiving the solar liquid fuel tax credit

of gross receipts and qualified expenses in a taxable year or

must create a schedule detailing the amount of the credit

short taxable years are involved, the amounts may be

passed through from each partnership or S corporation,

annualized or disregarded. Refer to IRC §§ 41(c)(3) and

and include the schedule with their tax returns.

41(f)(4) for details.

Existing firms and start-up companies

Part 3 - Partner's Share of Credit

Arizona’s definition of whether an organization is an existing

Lines 19 through 21 -

firm or a start-up company is also the same as federal, albeit

on an Arizona basis:

After a partnership completes Part 1, it must complete Part 3,



Existing firms - An existing firm is one that had both

lines 19 through 21, separately for each partner. The

Arizona gross receipts and Arizona qualified research

partnership must furnish each partner with a copy of

expenses for at least three taxable years beginning after

Form 344. Each partner must complete Part 4.

December 31, 1983, and before January 1, 1989. The

NOTE: Taxpayers who are partners or shareholders in

fixed-base percentage is the ratio that the aggregate

multiple entities receiving the solar liquid fuel tax credit

Arizona qualified research expenses for all taxable years

must create a schedule detailing the amount of the credit

beginning after 1983 and before 1989, bears to the

aggregate Arizona gross receipts for such taxable years.

passed through from each partnership or S corporation,



and include the schedule with their tax returns.

Start-up companies - A start-up company is one that had

both Arizona gross receipts and Arizona qualified research

Part 4 - Total Available Credit

expenses either (1) for the first time in a taxable year

beginning after December 31, 1983, or (2) for fewer than

Line 22 -

three taxable years beginning after 1983 and before 1989.

Individuals, corporations, exempt organizations with UBTI,

If the percentage computation involves de minimis amounts

and S corporations claiming the credit - enter the amount

of gross receipts and qualified expenses in a taxable year

from Part 1, line 14.

or short taxable years are involved, the amounts may be

S corporation shareholders - enter the amount from Part 2, line 18.

annualized or disregarded. Refer to IRC §§ 41(c)(3) and

41(f)(4) for details.

Partners of a partnership - enter the amount from Part 3, line 21.

NOTE: The maximum percentage that can be entered on line 9

This is the current taxable year's solar liquid fuel credit that

is 16 percent (.1600).

may be applied to the current year's tax liability.

Line 12 -

Corporations, exempt organizations with UBTI, and

S corporations - enter this amount on Form 300, Part 1,

Multiply line 7 by 50% (.50). The base amount cannot be less than

50 percent of the current year qualified research expenses. This rule

line 19, column (a).

applies to both existing and start-up companies.

Individuals - enter this amount on Form 301, Part 1, line 25,

Line 14 -

column (a).

Compute the amount of current year’s credit by multiplying

the amount on line 13 by 40 percent (.40).

Instructions For Form 344 - Arizona Solar Liquid Fuel Credit - 2014 Page 2

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