H.R. 8, “The American Taxpayer Relief Act of 2012,” passed the Senate and the House, with the President signing the bill on January 3, 2013. There were a number of business and energy tax extensions in the bill that included among others the extension and modification of the research (R&E) credit.
The R&E credit has been extended through 2013 (the credit was set to expire at the end of 2011). The R&E credit is in place to award companies for engaging in basic and applied research efforts to make technological improvements to new and existing products and processes.
In addition to the extension, the credit was modified to enable companies that acquire the major portion of either a trade or a business or a separate unit of a trade or business to claim qualified research expenses (QREs) from the acquisition. The modification enables companies to include a prorated portion QREs and the Gross Receipts from the acquisition in their R&E credit claim calculation.
Additionally, the language included under Aggregation of Expenditures has been modified to provide greater clarification regarding basic research payments and amounts paid to energy research consortiums but the language does not appear to change the meaning or intent of the section in a significant manner.
For more information on BCP’s R&E Tax Services, please contact:
Gregory J. Lormand: [email protected]