Schedule R & D - West Virginia Credit For Research And Development Projects Page 4
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7RESEARCH BY COLLEGES, UNIVERSITIES AND CERTAIN RESEARCH ORGANIZATIONS
In general, 65% of the amount paid or incurred by a corporation for research to any nonprofit education organization which is an institution
of higher education (as defined in Section 3304(f) of the Internal Revenue Code of 1954, as amended), an institution of higher education
subject to the jurisdiction of the West Virginia Board of Trustees or Board of Directors, or any other nonprofit organization exempt from
federal income taxes which is organized and operated primarily to conduct scientific research and is not a private foundation for federal
income tax purposes, shall be treated as contract research expense. The preceding sentence shall apply only if the amount is paid or
incurred pursuant to a written research agreement between the corporation and the qualified organization.
CREDIT RECAPTURE
Credit attributable to property that ceases to be used in this State prior to the end of its categorized useful life must be recalculated for
all tax years according to actual useful life. For example, Company R invests $12 million in a research computer with a designated useful
life of over 6 years in 1987. The credit for Company R is calculated to equal $800,000 or $80,000 per year for 10 years. However, Company
R sells this computer in 1991, and therefore the computer’s actual useful life in West Virginia is reduced to only 4 years. The corresponding
credit is reduced according to the above formula from $800,000 to $400,000 or $40,000 per year. A reconciliation statement for the 1987
through 1991 period reflecting an overutilization of credit must then be submitted with payment of any additional tax, interest and penalties.
COMPUTATION OF RESEARCH AND DEVELOPMENT PROJECTS CREDIT
Computation of Eligible Investment
Column 1.
Enter the net costs of the property and amount of in-house or contract research expenses in Column 1 on the appropriate
line determined by either the life of the property or the type of research expenses.
Column 2 & 3.
Multiply the net costs in Column (1) by the applicable percentages in Column (2). Enter the results in Column (3).
Line 6.
Add the figures in Column (3) and enter on Line 6. This is the taxpayer’s eligible investment.
Computation of Potential Current Annual Credit
Line 7.
To determine the taxpayer’s total potential current annual credit, which can be taken over a period of ten years, multiply
the total eligible investment (Line 6) by 10%. Enter the result on Line 7.
Computation of Current Annual Credit
Line 8.
To determine the taxpayer’s annual tax credit earned during the current taxable year, multiply the total potential credit
on Line 7 by 10%. Enter on Line 8.
Credit From Previous Years
Line 9.
Enter any annual Credit for Research and Development Projects from prior year(s). For eligible investments for multiple
year(s), a worksheet must be provided showing the computation.
Computation of Total Annual Credit
Line 10.
To determine the total amount of credit available in the current taxable year, add the credit earned during the current
year shown on Line 8 to the amounts available from previous years shown on Line 9. Enter the total on Line 10.
Line 11a.
Enter your total amount of pre-credit Business and Occupation Tax liability.
Line 11b.
Enter sum of Business Investment and Jobs Expansion Credit (Super Credit), Industrial Expansion or Revitalization
Credit, Residential Housing Development Project Credit and Coal Loading Facilities Credit, if any, applied against your
Business and Occupation Tax liability.
Line 11c.
Subtract amount on Line 11b from amount on Line 11a.
Line 11d.
Enter 50% of Line 11a.
Line 11e.
Enter sum of Industrial Expansion or Revitalization Credit and Residential Housing Development Credit, if any, applied
against your Business and Occupation Tax liability.
Line 11f.
Subtract amount on Line 11e from amount on Line 11d.
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