43-1168

43-1168. Credit for increased research
activities

(L10, Ch. 289, sec. 6 & Ch. 312, sec. 7. Rpld. 1/1/18)

A. A credit is allowed against the taxes imposed by this title in an amount
determined pursuant to section 41 of the internal revenue code, except that:

1. The amount of the credit is computed as follows:

(a) Add:

(i) The excess, if any, of the qualified research expenses for the taxable year
over the base amount as defined in section 41(c) of the internal revenue code.

(ii) The basic research payments determined under section 41(e)(1)(A) of the
internal revenue code.

(b) If the sum computed under subdivision (a) is two million five hundred thousand
dollars or less, the credit is equal to twenty-four per cent of that amount.

(c) If the sum computed under subdivision (a) is over two million five hundred
thousand dollars, the credit is equal to six hundred thousand dollars plus fifteen per
cent of any amount exceeding two million five hundred thousand dollars, except that:

(i) For taxable years beginning from and after December 31, 2000 through December
31, 2001, the credit shall not exceed one million five hundred thousand dollars.

(ii) For taxable years beginning from and after December 31, 2001 through December
31, 2002, the credit shall not exceed two million five hundred thousand dollars.

2. Qualified research includes only research conducted in this state including
research conducted at a university in this state and paid for by the taxpayer.

3. If two or more taxpayers, including corporate partners in a partnership, share
in the eligible expenses, each taxpayer is eligible to receive a proportionate share of
the credit.

4. The credit under this section applies only to expenses incurred from and after
December 31, 1993.

5. The termination provisions of section 41 of the internal revenue code do not
apply.

B. Except as provided by subsection D of this section, if the allowable credit
under this section exceeds the taxes otherwise due under this title on the claimant's
income, or if there are no taxes due under this title, the amount of the credit not used
to offset taxes may be carried forward to the next fifteen consecutive taxable
years. The amount of credit carryforward from taxable years beginning from and after
December 31, 2000 through December 31, 2002 that may be used under this subsection in any
taxable year may not exceed the taxpayer's tax liability under this title or five hundred
thousand dollars, whichever is less, minus the credit under this section for the current
taxable year's qualified research expenses. The amount of credit carryforward from
taxable years beginning from and after December 31, 2002 that may be used under this
subsection in any taxable year may not exceed the taxpayer's tax liability under this
title minus the credit under this section for the current taxable year's qualified
research expenses. A taxpayer that carries forward any amount of credit under this
subsection may not thereafter claim a refund of any amount of the credit under subsection
D of this section.

C. If a taxpayer has qualified research expenses that are carried forward from
taxable years beginning before January 1, 2001, the amount of the expenses carried
forward shall be converted to a credit carryforward by multiplying the amount of the
qualified expenses carried forward by twenty per cent. A credit carryforward determined
under this subsection may be carried forward to not more than fifteen years from the year
in which the expenses were incurred. The amount of credit carryforward from taxable
years beginning before January 1, 2001 that may be used under this subsection in any
taxable year may not exceed the taxpayer's tax liability under this title or five hundred
thousand dollars, whichever is less, minus the credit under this section for the current
taxable year's qualified research expenses. The total amount of credit carryforward from
taxable years beginning before January 1, 2003 that may be used in any taxable year under
subsection B and this subsection may not exceed the taxpayer's tax liability under this
title or five hundred thousand dollars, whichever is less, minus the credit under this
section for the current taxable year's qualified research expenses.

D. For taxable years beginning from and after December 31, 2009, if a taxpayer who
claims a credit under this section employs fewer than one hundred fifty persons in the
taxpayer's trade or business and if the allowable credit under this section exceeds the
taxes otherwise due under this title on the claimant's income, or if there are no taxes
due under this title, in lieu of carrying the excess amount of credit forward to
subsequent taxable years under subsection B of this section, the taxpayer may elect to
receive a refund as follows:

1. The taxpayer must apply to the department of commerce for qualification for the
refund pursuant to section 41-1507 and submit a copy of the department of commerce's
certificate of qualification to the department of revenue with the taxpayer's income tax
return.

2. The amount of the refund is limited to seventy-five per cent of the amount by
which the allowable credit under this section exceeds the taxpayer's tax liability under
this title for the taxable year. The remainder of the excess amount of the credit is
waived.

3. The refund shall be paid in the manner prescribed by section 42-1118.

4. The refund is subject to setoff under section 42-1122.

5. If the department determines that a credit refunded pursuant to this subsection
is incorrect or invalid, the excess credit issued may be treated as a tax deficiency
pursuant to section 42-1108.

E. A taxpayer that claims a credit for increased research and development activity
under this section shall not claim a credit under section 43-1164.02 for the same
expenses.