Schedule R & D - West Virginia Credit For Research And Development Projects (Page 3 of 7) in pdf

QUALIFIED RESEARCH EXPENSES

Qualified research expenses means the sum of in-house and contract research expenses paid or incurred for qualified research allocated

to West Virginia by an eligible taxpayer. Qualified research expenses do not include any expense that must be capitalized and depreciated

for federal income tax purposes, or any expenditure paid or incurred for the purpose of ascertaining the existence, location, extent or quality

of any deposit of coal, limestone, or other natural resource, including oil or gas.

In-House Research Expenses

In-house research expenses include:

(A) Wages paid or incurred to an employee for qualified services performed in this State by such employee;

(B) Amounts paid or incurred for supplies used in the conduct of qualified research in this State; and

(C) Amounts paid or incurred to another person for the right to use personal property in the conduct of qualified research in this State.

Qualified services include services consisting of:

(A) Engaging in qualified research in this State; or

(B) Engaging in the direct supervision or direct support of research activities in this State, which constitute qualified research.

If substantially all of the services performed by an individual for the taxpayer during the taxable year consist of services meeting the

requirements of subparagraph (A) or (B), the term qualified services means all services performed by such individual for the taxable year.

Supplies means any tangible property other than:

(A) Land or improvement to land, and

(B) Property of a character subject to depreciation for federal income tax purposes.

Wages has the meaning given to such term by Section 3401(a) of the Internal Revenue Code of 1954, as amended. In the case of self-

employed individuals and owner-employees (within the meaning of Section 401(c)(1) of the Internal Revenue Code), the term “wages”

includes the earned income (as defined in Section 401(c)(2) of the Internal Revenue Code) of such employee. The term “wages” shall

not include any amount taken into account in determining the federal targeted jobs credit under Section 51(a) of the Internal Revenue Code.

Contract Research Expenses

Contract Research expenses means:

(A) In general, 65% of any amount paid or incurred by the taxpayer to any person (other than an employee of the taxpayer) for

qualified research.

(B) If any contract research expenses paid or incurred during any taxable year are attributable to qualified research to be

conducted after the close of the taxable year, such amount shall be treated as paid or incurred during the taxable year during

which the qualified research is conducted.

Qualified Research means research and development conducted for purposes relating to the technical, economic, financial, engineering

or marketing aspects of expanding markets for and increasing sales of this State’s natural resource products or manufactured products,

or both, but it shall not include:

(A) Research or development conducted outside this State;

(B) Research or development not directly related to increasing the uses for and sales of this State’s natural resource products and

industrial products;

(D) Research and development to the extent funded by any grant, contract or otherwise by another person (or any governmental

entity).

Schedule R & D - West Virginia Credit For Research And Development Projects Page 3