OUR THOUGHTS ON:

Election of Alternative Simplified Research Credit Now Allowed on Amended Returns

Construction

By Katrina Streiner

The research credit is an incentive for companies conducting activities such as the design, development or improvement of products or processes in the United States.

The Alterative Simplified Credit ("ASC") is an elective method of computing the research credit. In general, a taxpayer that elects to use the ASC is allowed a credit equal to 14% of the amount by which its qualified research expenses (QREs) for the year exceed 50% of its average QREs for the three preceding tax years. An electing taxpayer that does not have any QREs in one or more of the three preceding tax years is allowed an ASC equal to 6% of its QREs for the tax year.

In 2011, the Internal Revenue Service (IRS) issued regulations that did not permit taxpayers to elect the ASC method on an amended return. However, the IRS recently issued temporary regulations (T.D. 9666) permitting taxpayers to elect the ASC method on an amended return as long as the taxpayer (or a member of its controlled group) did not make an election to use any other method of calculating the research credit on an original or amended return for that year.

By allowing taxpayers the ability to claim the ASC on an amended return, the new regulations provide taxpayers with additional time and flexibility in determining whether to utilize the ASC method to calculate their research credit.

© 2014 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

comments