Virginia Form Rdc - Application For Research And Development Expenses Tax Credit (Page 3 of 4) in pdf

Application Instructions for

Research and Development Expenses Tax Credit

General Information

1c. Calculate the percentage of Virginia qualified

The Research and Development Expenses Tax

research and development expenses by dividing

Credit may be claimed against the individual and

the average amount determined in step 1a by the

corporate income taxes for qualified research and

average amount determined in step 1b. This is

development expenses for taxable years beginning

the “fixed base percentage.”

on or after January 1, 2011, but before January 1,

Step 2 - Determine the Virginia Base Amount:

2016. The tax credit amount is equal to (i) 15 percent

2a. Determine average of the total gross receipts for

of the first $167,000 in Virginia qualified research

the four taxable years preceding the taxable year

and development expenses, or (ii) 20 percent of

that the tax credit is being claimed, or the number

the first $175,000 of Virginia qualified research and

of years used for step 1b, if less.

development expenses if the research was conducted

in conjunction with a Virginia public or private college

2b. Multiply the fixed base percentage in step 1c by

or university, to the extent the expenses exceed the

the average gross receipts in step 2a.

base amount.

2c. Determine the greater of the amount in step 2b

There is a $5 million cap on the total amount of credits

or 50% of Virginia qualified research expenses

allowed in any fiscal year. If the total amount of tax

for the credit year.” This is the “Virginia Base

credits applied for exceed the $5 million limit, credits

Amount.”

will be allocated on a pro rata basis.

Definitions

If the total amount of approved tax credits is less than

“Virginia gross receipts” means the whole, entire, total

the $5 million limit, the Department of Taxation will

receipts, without deduction.

allocate the remaining amount to the taxpayers already

“Virginia qualified research” means qualified research,

approved for the tax credits for the taxable year in an

as defined in § 41(d) of the IRC, as amended, that is

amount equal to 15 percent of the second $167,000

conducted in Virginia. In general, this is research that is

in qualified research expenses or 20 percent of the

undertaken for the purpose of discovering information

second $175,000 in qualified research expenses if the

that is technological in nature and the application of

research is conducted in conjunction with a Virginia

which is intended to be useful in the development of a

public or private college or university.

new or improved business component of the taxpayer.

Any taxpayer that is allowed a research and

“Virginia

qualified

research

and

development

development expenses tax credit is not allowed to use

expenses” means qualified research expenses, as

the same expenses as the basis for claiming any other

defined in § 41(b) of the IRC, as amended, incurred for

Virginia tax credit.

Virginia qualified research. In general, this is the sum

Determining the Virginia Base Amount

of the in-house research expenses and the contract

In order to determine the Virginia Base Amount, please

research expenses.

follow these steps:

Stem Cell Research

Step 1 - Determine Fixed Base Percentage:

If you conduct research and development in Virginia on

1a. Determine the average amount of Virginia

human cells or tissue derived from induced abortions

qualified research and development expenses

or from stem cells obtained from human embryos,

for the three taxable years preceding the year

then no credit can be granted for the expenses paid

in which the tax credit is being claimed. If the

or incurred for such research and development and

taxpayer has been in business for less than three

any credit amount for other qualified research and

years, but at least one, use the number of years

development expenses cannot be refunded to you.

in business instead of three.

These restrictions do not apply to research conducted

using stem cells other than embryonic stem cells.

1b. Determine the average of the total gross receipts

for the three taxable years preceding the taxable

When to Submit Application

year that the tax credit is being claimed, or the

Form RDC and any supporting documentation must

number of years used in step 1a, if less (must be

be completed and mailed no later than April 1.

at least one year).

Virginia Form Rdc - Application For Research And Development Expenses Tax Credit Page 3

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