Form Srdtc-1 - West Virginia Strategic Research And Development Tax Credit (Page 5 of 6) in pdf

the requirement of subparagraph (A) or (B), the term qualified

and operated primarily to conduct scientific research and is not a

services means all services performed by such individual for the

private foundation for federal income tax purposes, shall be treated

taxable year.

as contract research expense. The preceding sentence shall apply

only if the amount is paid or incurred pursuant to written research

Supplies means any tangible property other than:

agreement between the corporation and the qualified organization.

A. Land or improvement to land, and

CREDIT RECAPTURE

B. Property of a character subject to depreciation for federal

Credit attributable to property that ceases to be used in this State

income tax purposes.

prior to the end of its categorized useful life must be recalculated for

Wages has the meaning given to such term by Section 3401 (a) [26

all tax years according to actual useful life. For example, Company

USCS §3401] of the Internal Revenue Code of 1986, as amended.

R invests $8 million in a research computer with a designated

In the case of self-employed individuals and owner-employees

useful life of over 6 years in 2003. The credit for Company R is

(within the meaning of Section 401 (c) (1) of the Internal Revenue

calculated to equal $800,000. However, Company R sells this

Code), the term “wages” includes the earned income (as defined

computer in 2005, and therefore the computer’s actual useful life

in Section 401 (c) (2) of the Internal Revenue Code) of such

in West Virginia is reduced to only 2 years. The corresponding

employee. The term “wages” shall not include any amount taken

credit is reduced according to the above formula from $800,000

into account in determining the federal targeted jobs credit under

to $266,667. A reconciliation statement for the 2003 through

Section 51(a) of the Internal Revenue Code.

2005 period reflecting an over utilization of credit must then

be submitted with payment of any additional tax, interest and

penalties.

ONTACT

ESEARCH

XPENSES

Contract Research expenses means:

COMPUTATION OF STRATEGIC

A. In general, 65% of any amount paid or incurred by the

RESEARCH AND DEVELOPMENT

taxpayer to any person (other than an employee of the

TAX CREDIT

taxpayer) for qualified research.

Computation of Eligible Investment

B. If any contract research expenses paid or incurred during

any taxable year are attributable to qualified research to be

Enter the net costs of the property and amount of in-

conducted after the close of the taxable year, such amount

1 1

in Column 1 on

house or contract research expenses

shall be treated as paid or incurred during the taxable year

during which the qualified research is conducted.

the appropriate line determined by either the life of the

property or thetype of research expenses.

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

Multiply the net costs in Column (1) by the applicable

2&3

of this State’s natural resource products or manufactured products,

percentages in Column (2). Enter the results in Column

or both, but it shall not include:

(3).

A. Research or development conducted outside this State;

Add the figures in Column (3) and enter on Line 6. This

6 6

B. Research or development not directly related to increasing

is the taxpayer’s eligible investment.

the uses for and sales of this State’s natural resources

If You Conducted Research and Development in West Virginia

products and industrial products.

During Prior Years, go to Line 7a, Otherwise Skip to Line 9

C. Research in the social sciences or humanities; or

D. Research and development to the extent funded by any

a. Repeat the calculation at Column 1, Column 2 and 3

7 7

grant, contract or otherwise by another person (or any

the current year

for the year immediately preceding

governmental entity).

and enter the result here.

RESEARCH BY COLLEGES,

b. Repeat the calculations of Column 1, Column 2 and 3 for the

UNIVERSITIES AND CERTAIN

second year immediately preceding the current year and enter the

RESEARCH ORGANIZATIONS

result here.

In general, 65% of the amount paid or incurred by a corporation

c. Repeat the calculation of Column 1, Column 2 and 3 for the

for research to any nonprofit education organization which is an

third year immediately preceding the current year and enter the

institution of higher education (as defined in Section 3304 (f ) of

result here.

the Internal Revenue Code of 1986, as amended), an institution of

higher education subject to the jurisdiction of the West Virginia

Add the amounts on Line 7a, Line 7b and Line 7c

Board of Trustees or Board of Directors, or any other nonprofit

8 8

organization exempt from federal income taxes which is organized

Rev. 9/12

Form Srdtc-1 - West Virginia Strategic Research And Development Tax Credit Page 5

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