59-10-1012 - Tax credits for research activities conducted in the state -- Carry forward -- Commission to report modification or repeal of certain federal provisions -- Utah Tax Review Commission stud
59-10-1012. Tax credits for research activities conducted in the state -- Carryforward -- Commission to report modification or repeal of certain federal provisions --Utah Tax Review Commission study.
(1) (a) A claimant, estate, or trust meeting the requirements of this section may claim thefollowing nonrefundable tax credits:
(i) a research tax credit of 5% of the claimant's, estate's, or trust's qualified researchexpenses for the current taxable year that exceed the base amount provided for under Subsection(3);
(ii) a tax credit for a payment to a qualified organization for basic research as provided inSection 41(e), Internal Revenue Code of 5% for the current taxable year that exceed the baseamount provided for under Subsection (3); and
(iii) a tax credit equal to:
(A) for the taxable year beginning on or after January 1, 2008, but beginning on or beforeDecember 31, 2008, 5% of the claimant's, estate's, or trust's qualified research expenses for thecurrent taxable year;
(B) for the taxable year beginning on or after January 1, 2009, but beginning on or beforeDecember 31, 2009, 6.3% of the claimant's, estate's, or trust's qualified research expenses for thecurrent taxable year; or
(C) for taxable years beginning on or after January 1, 2010, 9.2% of the claimant's,estate's, or trust's qualified research expenses for the current taxable year.
(b) Subject to Subsection (4), a claimant, estate, or trust may claim a tax credit under:
(i) Subsection (1)(a)(i) or (1)(a)(iii), for the taxable year for which the claimant, estate, ortrust incurs the qualified research expenses; or
(ii) Subsection (1)(a)(ii), for the taxable year for which the claimant, estate, or trustmakes the payment to the qualified organization.
(c) The tax credits provided for in this section do not include the alternative incrementalcredit provided for in Section 41(c)(4), Internal Revenue Code.
(2) Except as specifically provided for in this section:
(a) the tax credits authorized under Subsection (1) shall be calculated as provided inSection 41, Internal Revenue Code; and
(b) the definitions provided in Section 41, Internal Revenue Code, apply in calculatingthe tax credits authorized under Subsection (1).
(3) For purposes of this section:
(a) the base amount shall be calculated as provided in Sections 41(c) and 41(h), InternalRevenue Code, except that:
(i) the base amount does not include the calculation of the alternative incremental creditprovided for in Section 41(c)(4), Internal Revenue Code;
(ii) a claimant's, estate's, or trust's gross receipts include only those gross receiptsattributable to sources within this state as provided in Section 59-10-118; and
(iii) notwithstanding Section 41(c), Internal Revenue Code, for purposes of calculatingthe base amount, a claimant, estate, or trust:
(A) may elect to be treated as a start-up company as provided in Section 41(c)(3)(B)regardless of whether the claimant, estate, or trust meets the requirements of Section41(c)(3)(B)(i)(I) or (II); and
(B) may not revoke an election to be treated as a start-up company under Subsection
(3)(a)(iii)(A);
(b) "basic research" is as defined in Section 41(e)(7), Internal Revenue Code, except thatthe term includes only basic research conducted in this state;
(c) "qualified research" is as defined in Section 41(d), Internal Revenue Code, except thatthe term includes only qualified research conducted in this state;
(d) "qualified research expenses" is as defined and calculated in Section 41(b), InternalRevenue Code, except that the term includes only:
(i) in-house research expenses incurred in this state; and
(ii) contract research expenses incurred in this state; and
(e) a tax credit provided for in this section is not terminated if a credit terminates underSection 41, Internal Revenue Code.
(4) (a) If the amount of a tax credit claimed by a claimant, estate, or trust underSubsection (1)(a)(i) or (ii) exceeds the claimant's, estate's, or trust's tax liability under this chapterfor a taxable year, the amount of the tax credit exceeding the tax liability:
(i) may be carried forward for a period that does not exceed the next 14 taxable years;and
(ii) may not be carried back to a taxable year preceding the current taxable year.
(b) A claimant, estate, or trust may not carry forward the tax credit allowed bySubsection (1)(a)(iii).
(5) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, thecommission may make rules for purposes of this section prescribing a certification process forqualified organizations to ensure that amounts paid to the qualified organizations are for basicresearch conducted in this state.
(6) If a provision of Section 41, Internal Revenue Code, is modified or repealed, thecommission shall report the modification or repeal to the Utah Tax Review Commission within60 days after the day on which the modification or repeal becomes effective.
(7) (a) The Utah Tax Review Commission shall review the tax credits provided for inthis section on or before October 1 of the year after the year in which the commission reportsunder Subsection (6) a modification or repeal of a provision of Section 41, Internal RevenueCode.
(b) Notwithstanding Subsection (7)(a), the Utah Tax Review Commission is not requiredto review the tax credits provided for in this section if the only modification to a provision ofSection 41, Internal Revenue Code, is the extension of the termination date provided for inSection 41(h), Internal Revenue Code.
(c) The Utah Tax Review Commission shall address in a review under this section:
(i) the cost of the tax credits provided for in this section;
(ii) the purpose and effectiveness of the tax credits provided for in this section;
(iii) whether the tax credits provided for in this section benefit the state; and
(iv) whether the tax credits provided for in this section should be:
(A) continued;
(B) modified; or
(C) repealed.
(d) If the Utah Tax Review Commission reviews the tax credits provided for in thissection, the Utah Tax Review Commission shall report its findings to the Revenue and TaxationInterim Committee on or before the November interim meeting of the year in which the Utah Tax
Review Commission reviews the tax credits.
Amended by Chapter 4, 2008 General Session
Amended by Chapter 382, 2008 General Session