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S.F. No. 913 - Modification of base amount calculation for R&D credit (as proposed to be amended by the A-1 amendment)
 
Author: Senator Carla J. Nelson
 
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
 
Date: March 6, 2017



 

Under current law, the R&D credit is calculated by taking a percentage of qualified research expenses in the taxable year over a base amount. The base amount is a percentage of qualified expenses in tax years 1984 to 1988, up to 16 percent. This bill authorizes taxpayers to elect an alternative simplified credit (ASC) calculation using the three previous years of qualified research expenses, effective beginning in tax year 2017.

Section

Provision

1

For taxpayers who elect the ASC method, authorizes a credit of six percent of qualified research expenses over the base amount. 
 

2

Provides a new definition for the base amount for taxpayers making the ASC election: 50 percent of the average of qualified research expenses for the three previous taxable years prior to the year the credit is claimed.
 

3

Authorizes the ASC election. As proposed to be amended, the taxpayer may revoke the election at any time. 

 
 
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