Schedule R & D - West Virginia Credit For Research And Development Projects (Page 2 of 7) in pdf

(2) Motor vehicles licensed by the Department of Motor Vehicles;

(3) Airplanes;

(4) Off-premise transportation equipment;

(5) Property located or primarily used outside this State;

(6) Property acquired incident to the purchase of the stock or assets of an industrial taxpayer which was or had been used by the

seller in its industrial business in this State, or which was previously designated property purchased for the business investment

and jobs expansion credit, property purchased for industrial expansion or industrial revitalization credits, property purchased

for coal loading facility credit, property purchased for the management information systems facility or coal conversion facility

credits, or property purchased for the research and development project credit.

(7) Property purchased or placed into service prior to July 1, 1985.

NET COST

Net Cost is the net monetary consideration provided for acquisition of title and/or ownership to the subject property. Net cost shall not

include the value of any property given in trade or exchange for property purchased for an eligible research and development project. If

property is damaged or destroyed by fire, flood, storm or other casualty or is stolen, the cost of replacement shall not include any insurance

proceeds received in compensation for the loss.

In the case of leased property, net cost is the rent reserved for the primary term of the lease, not to exceed 20 years.

In the case of self-constructed property, the cost thereof is the amount of property charged to the capital account for purposes of

depreciation.

PROPERTY PURCHASED FOR MULTIPLE BUSINESS USE

If property is purchased for multiple business use, including use as a component part of an eligible research and development project

together with some other business or occupation not qualifying (for example, retailing), the cost of the property must be apportioned. The

apportionment of multiple-use properties must be thoroughly supported and explained by separate documents submitted with the

application.

ELIGIBLE INVESTMENT

The eligible investment in a research and development project is the sum of the applicable percentage of the cost of land and depreciable

property purchased for use in an eligible research and development project, plus the amount of qualified research expenses deducted

by the taxpayer for federal income tax purposes.

Property Investment

To determine the amount of property investment eligible for the Research and Development Projects Credit, the net cost of each property

purchased is multiplied by the applicable percentage shown below according to the useful life of the property. In order to be eligible for

the credit, the property must have been placed into use in West Virginia during the taxable year.

If useful life is:

The applicable percentage is:

4 years or more but less than 6 years

33 1/3%

6 years or more but less than 8 years

66 2/3%

8 years or more

100%

EXAMPLE

If a taxpayer purchases $30,000 of machinery with a useful life of six years for use in an eligible research and development

project, the eligible investment is equal to $20,000. The eligible investment is calculated by multiplying the cost of the

machinery, $30,000, times the applicable percentage according to the useful life, 66 2/3, to arrive at $20,000. The resulting

credit is equal to 10% of the eligible investment or $2,000. This credit must be claimed over a period of 10 years at a rate

of 10% ($200) per year.

Schedule R & D - West Virginia Credit For Research And Development Projects Page 2

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