Form 01-931 - Qualified Research Sales And Use Tax Exemption Certificate Page 2
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2Form 01-931 (Back)(Rev.2-17/2)
What Types of Items Qualify for the Research Exemption?
The exemption can be claimed on the purchase, lease, rental, storage or use of depreciable tangible personal property directly
used in qualified research. To claim the exemption, the purchaser must include the RD registration number issued by the Comp-
troller on this certificate.
Depreciable tangible personal property is tangible personal property that meets the criteria below:
• has a useful life of more than one year; and
• is subject to depreciation under either Generally Accepted Accounting Principles (GAAP) or Section 167 or 168 of the
Internal Revenue Code. For federal income tax purposes, a depreciation deduction, generally, is a reasonable allowance
for the exhaustion, wear and tear and, in some cases for the obsolescence, of certain business-related or income-producing
property. For the purpose of the sales tax exemption, the depreciable item must be directly used in qualified research.
Examples of items that qualify for exemption include tools and machinery.
Nonqualifying items include electricity and natural gas.
Qualified Research
"Qualified research" means research for which expenditures may be treated as expenses under Section 174, Internal Revenue
Code. The research must be undertaken to discover information that is technological in nature, and that will be applied in devel-
oping a new or improved business component of the person undertaking the research. Substantially, all of the activities of the
research must be elements of a process of experimentation relating to a new or improved function, performance, reliablility
or quality.
Non-Qualified Research
Qualified research does not include the following activities:
•
research related to style, taste, cosmetic or seasonal design factors;
•
research conducted after the beginning of commercial production of the business component;
•
research adapting an existing product or process to a particular customer's need;
•
duplication of an existing product or process;
•
surveys or studies;
•
research relating to certain internal-use computer software;
•
research conducted outside the United States, Puerto Rico or a U.S. possession;
•
research in the social sciences, arts or humanities; or
•
research funded by another person or governmental entity.
For more information, visit our Research and Development website at
You may also contact us online at or by phone at 1-800-252-5555 or 512-463-4600.
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