TTC :: Tax Transfer Pennsylvania

To claim the PA Research and Development (R&D) credit, it is necessary for a taxpayer to have qualified.
Pennsylvania R&D expenses in the current tax year (line 1) and in at least one preceding tax year (line 3).

NOTE: If PA R&D expenditures were incurred in a KOZ zone, the taxpayer is not entitled to an R&D credit. If the PA R&D expenditures were not incurred in a KOZ zone, the taxpayer must include a statement to that effect in order to be considered for the credit.

For purposes of the PA R&D credit, a taxpayer is an entity subject to PA personal income tax, PA corporate net income tax or PA capital stock/franchise tax. The term taxpayer also includes the shareholder of a PA S corporation that receives a PA R&D tax credit. The PA R&D credit applicable to a partnership may be claimed by each partner on a pass through basis with each partner (taxpayer) computing the credit on a pro-rata basis. PA qualified R&D expenses are qualified research expenses as defined in section 41 (B) of the Internal Revenue Code of 1986, incurred for PA qualified research and development conducted within the Commonwealth of Pennsylvania.

A taxpayer must apply for the PA R&D credit by September 15 for PA R&D expenses incurred in the taxable year that ended in the prior calendar year. Thus, an application for PA R&D credit must be submitted by September 15, 2004 for all PA R&D expenses incurred in the tax years ending in 2003. Fifty two/fifty three-week filers whose year ends in the first week of January will be considered to be calendar year (12-31) filers. The Department will notify all taxpayers by December 15 in the year in which an application is submitted, of the approved amount of PA R&D credit. The taxpayer may apply the approved credit against their PA personal income tax, PA corporate net income tax, or PA capital stock/franchise tax for the current taxable year (the tax year in which the credit is approved). The amount of credit applied to any tax liability cannot exceed 50% of such liability for that taxable year (the 50% limitation is eliminated for tax years beginning in 2005 and thereafter). Any unused credit may be carried over to no more than the fifteen succeeding taxable years. A taxpayer is not entitled to carry back, to obtain a refund of, or to assign unused PA R&D tax credits (for awards made 12/15/02 and prior). Effective for awards made 12/15/03 and thereafter, the taxpayer can apply to the PA Department of Community and Economic Development (DCED) to sell or assign a PA R&D credit if there has been no claim of allowance filed within one year from the date that the Department of Revenue approved the credit. Contact DCED at 400 North St, 4th Fl., Keystone Building, Harrisburg PA 17120-0225; telephone 717-787-7120 or 1-800-379-7448; website http://www.inventpa.com/. The purchaser or assignee must use the credit in the taxable year in which the purchase or assignment is made and the credit cannot exceed 75 percent of the tax liability for the taxable year. The purchaser or assignee may not carry over, carry forward, carry back or obtain a refund of the credit.

If any tax years on line 1 or lines 3A, 3B, 3C or 3D of the application form represents a period of less than a full year, (other than for full year 52/53 week filers), the amount(s) of PA R&D expenses must be annualized.

Example: Tax year beginning 01-01-03 and ending 07-31-03

Annualized amount = 1,000,000 x 365*/212 = 1,721,698.

*Use 366 for periods that include February 29.

If the taxpayer has two or more consecutive short periods that equal one full tax year, the short periods shall
be combined as a single tax year on line three of the application.

ATTACH ALL ADDITIONAL INFORMATION USED TO DETERMINE THE CREDIT SUCH AS, FEDERAL FORM 6765, BALANCE SHEETS FOR A "SMALL BUSINESS" AND ANY APPLICABLE PARTNERSHIP INFORMATION (PERCENTAGE OWNED, ETC.).

For more specific information please call us.
1-800-604-0065

Contact Us

2004-2006 Copyright Tax Transfer Pennsylvania Corporation