Form 2070ac 0007 - Application And Computation Schedule For Claiming Delaware Research And Development Tax Credits Page 2
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1
2GENERAL INSTRUCTIONS FOR COMPLETION OF
FORM 2070AC 0007
The Delaware Division of Revenue must first approve any taxpayer electing to qualify for the Delaware Research & Development
Tax Credits. After receiving tax credit approval from the Delaware Division of Revenue, the amount of approved credit on Delaware
Form 2070AC must be transferred to the appropriate line on Delaware Form 700. Delaware Forms 700 and 2070AC must be
attached to each annual income tax return approved for the credit. If you need assistance completing this form, please contact
Steve Seidel, DE Division of Revenue, 820 N. French Street, Wilmington, DE 19801, 302-577-8455, stephen.seidel@state.de.us.
SPECIFIC INSTRUCTIONS
SELECT A METHOD TO COMPUTE THE DELAWARE RESEARCH & DEVELOPMENT CREDIT. ONLY ONE METHOD MAY BE
SELECTED TO COMPUTE THE CREDIT. PLEASE ATTACH A COPY OF FEDERAL FORM 6765 TO THIS APPLICATION. IF A
CONSOLIDATED CORPORATE INCOME TAX RETURN IS FILED, PLEASE ATTACH A PROFORMA FEDERAL FORM 6765
FOR THE CORPORATE APPLICANT.
METHOD A – TEN PERCENT OF THE EXCESS OF THE TAXPAYER’S TOTAL DELAWARE QUALIFIED RESEARCH &
DEVELOPMENT EXPENSES FOR THE TAXABLE YEAR OVER THE TAXPAYER’S DELAWARE BASE AMOUNT.
Enter the total Delaware qualified research & development expenses for the four years immediately preceding the credit
Line 1.
year.
Enter the total Delaware gross receipts for the four years immediately preceding the credit year.
Line 2.
Divide Line 1 by Line 2. This is the Delaware Fixed Base Percentage.
Line 3.
Enter the average annual gross receipts for the four years immediately preceding the credit year.
Line 4.
Multiply Line 3 by Line 4. This is the Delaware Base Amount.
Line 5.
Line 6.
Enter the total Delaware qualified research & development expenses for the credit year.
Subtract Line 5 from Line 6. If the result is zero or less, enter zero.
Line 7.
Multiply Line 6 by 50%.
Line 8.
Enter the smaller of Line 7 or Line 8.
Line 9.
This is your Delaware Research & Development Credit. Multiply Line 9 by 10%.
Line 10.
METHOD B – FIFTY PERCENT OF DELAWARE’S APPORTIONED SHARE OF TAXPAYER’S FEDERAL RESEARCH &
DEVELOPMENT TAX CREDIT CALCULATED USING THE ALTERNATIVE INCREMENTAL CREDIT METHOD UNDER SECTION
41(C)(4) OF THE INTERNAL REVENUE CODE OF 1986, USING FEDERAL DEFINITIONS AND METHODOLOGY.
Enter the Federal Alternative Incremental Credit from Line 39, Federal Form 6765.
Line 1.
Line 2.
Enter the Delaware qualified research & development expenses for the credit year.
Enter all qualified research & development expenses for the credit year.
Line 3.
Divide Line 2 by Line 3.
Line 4.
Multiply Line 1 by Line 4.
Line 5.
This is your Delaware Research & Development Credit. Multiply Line 5 by 50%.
Line 6.
STOP: IF THE BUSINESS ENTITY FOR WHICH THE CREDIT HAS BEEN APPROVED IS:
C CORPORATION – Enter the Delaware R&D Credit on Form 700, Delaware Income Tax Credit Schedule, Line 10(a).
•
S CORPORATION – Multiply the Delaware R&D Credit by the percentage of stock owned by each shareholder. Enter the result
•
on Form 700, Delaware Income Tax Credit Schedule, Line 10(b).
PARTNERSHIP – Multiply the Delaware R&D Credit by the percentage ownership of each partner. Enter the result on Form 700,
•
Delaware Income Tax Credit Schedule, Line 10(c).
INDIVIDUAL & SOLE PROPRIETOR – Enter the Delaware R&D Credit on Form 700, Delaware Income Tax Credit Schedule,
•
Line 10(d).
THE TOTAL AMOUNT OF CREDITS APPROVED BY THE DIRECTOR WITH RESPECT TO ALL APPLICANTS FOR THE
RESEARCH & DEVELOPMENT TAX CREDITS SHALL NOT EXCEED $5,000,000 IN ANY FISCAL YEAR. IF THE AMOUNT OF
RESEARCH & DEVELOPMENT TAX CREDITS FOR WHICH ALL TAXPAYERS APPLIED IN ANY FISCAL YEAR EXCEEDS
$5,000,000, THEN THE RESEARCH DEVELOPMENT TAX CREDITS TO BE RECEIVED BY EACH APPLICANT SHALL BE THE
PRODUCT OF $5,000,000 MULTIPLIED BY A FRACTION, THE NUMERATOR OF WHICH IS THE ELIGIBLE RESEARCH &
DEVELOPMENT TAX APPLIED FOR BY THE APPLICANT AND THE DENOMINATOR IS THE TOTAL OF ALL ELIGIBLE
RESEARCH & DEVELOPMENT TAX CREDITS APPLIED FOR BY ALL APPLICANTS.
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