Current Year Credit (Members of controlled groups or businesses under common control, see ins

Basic research payments to qualified organizations (see instructions) 2

Qualified organization base period amount

2

3

Subtract line 3 from line 2. If zero or less, enter -0-

3

4

Wages for qualified services (do not include wages used in figuring the

work opportunity credit)

4

5

Cost of supplies

5

6

Rental or lease costs of computers (see instructions)

6

7

Enter the applicable percentage of contract research expenses (see instructions)

7

8

Total qualified research expenses. Add lines 5 through 8

8

%

9 9

10

Enter average annual gross receipts (see instructions)

10

11

Multiply line 11 by the percentage on line 10

11

12

Subtract line 12 from line 9. If zero or less, enter -0-

12

13

Multiply line 9 by 50% (.50)

13

14

Enter the smaller of line 13 or line 14

14

15

Add lines 1, 4, and 15

15

Regular credit. If you are not electing the reduced credit under section 280C(c), multiply line 16

by 20% (.20), enter the result, and see the instructions for the schedule that must be attached.

If you are electing the reduced credit, multiply line 16 by 13% (.13) and enter the result. Also,

write “Sec. 280C” on the dotted line to the left of the entry space. Go to Section C

17

16

For Paperwork Reduction Act Notice, see instructions. Form 6765 (200

Part I

Cat. No. 13700H

Enter fixed-base percentage, but not more than 16% (see instructions)

Section A—Regular Credit. Skip this section and go to Section B if you are electing or previously elected the alternative incremental cr

Section B—Alternative Incremental Credit. Skip this section if you completed Section A.

Multiply line 28 by 1% (.01)

Subtract line 29 from line 27. If zero or less, enter -0-

Multiply line 28 by 1.5% (.015)

Subtract line 31 from line 27. If zero or less, enter -0-

Subtract line 32 from line 30

Multiply line 28 by 2% (.02)

Subtract line 34 from line 27. If zero or less, enter -0-

Subtract line 35 from line 32

Multiply line 33 by 2.65% (.0265)

Multiply line 36 by 3.2% (.032)

Multiply line 35 by 3.75% (.0375)

Add lines 22, 37, 38, and 39

Basic research payments to qualified organizations (see the line 2 instructions)

Qualified organization base period amount (see the line 3 instructions)

Subtract line 20 from line 19. If zero or less, enter -0-

19

Multiply line 21b by 20% (.20)

20

Wages for qualified services (do not include wages used in figuring the

work opportunity credit)

21a

Cost of supplies

22

Rental or lease costs of computers (see the line 7 instructions)

23

Enter the applicable percentage of contract research expenses (see

the line 8 instructions)

24

Total qualified research expenses. Add lines 23 through 26

25

Enter average annual gross receipts (see the line 11 instructions)

26

19

20

21a

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

27

28

29

30

31

32

33

34

35

36

37

38

39

1 Certain amounts paid or incurred to energy consortia after August 8, 2005 (see instructions) 1

17

16

18 Certain amounts paid or incurred to energy consortia after August 8, 2005 (see the line 1 instructions) 18

40 40

Alternative incremental credit. If you are not electing the reduced credit under section 280C(c),

enter the amount from line 40, and see the line 17 instructions for the schedule that must be

attached. If you are electing the reduced credit, multiply line 40 by 65% (.65) and enter the result.

Also, write “Sec. 280C” on the dotted line to the left of the entry space 41

41

21b Add lines 18 and 21a 21b
Credit allowed for the current year. Individuals, estates, and trusts: Enter the smallest of

line 43, line 53, or the amount from the formula in the instructions for line 54 here and on Form

1040, line 55; or Form 1041, Schedule G, line 2c. Corporations: Enter the smaller of line 43 or

line 53 here and on Form 1120, Schedule J, line 6d; Form 1120-A, Part I, line 2; or the applicable

line of other returns. If line 54 is smaller than line 43, see instructions

54

54

47a 47a

Credits from Form 1040, lines 48 through 54 47b b

47d

Foreign tax credit

d

Possessions tax credit (Form 5735, line 17 or 27)

f

Nonconventional source fuel credit (Form 8907, line 23)

Other specified credits (see instructions)

Add lines 47a through 47e 47f

48

48 Net income tax. Subtract line 47f from line 46. If zero, skip lines 49 through 52 and enter -0- on

line 53

45 Alternative minimum tax (see instructions) 45

49

Tentative minimum tax (see instructions)

49

50 Enter 25% (.25) of the excess, if any, of line 49 over $25,000 (see

instructions)

52

Subtract line 52 from line 48. If zero or less, enter -0-

52

53

c 47c

44 Regular tax (see instructions)

46 Add lines 44 and 45 46

51

Enter the greater of line 50 or line 51

50

51

Net regular tax. Subtract line 47f from line 44. If zero or less, enter -0-

53

e 47e

Use Form 6765 to figure and claim the

credit for increasing research activities.

Who Must File

Qualified Research

If you incur qualified clinica

expenses relating to drugs fo

rare diseases, you can elect 

the orphan drug credit for th

expenses instead of the rese

See Form 8820, Orphan Dru

Special Rules

For special rules concernin

allocation and apportionmen

and experimental expenditur

U.S. and foreign source inco

sections 861 through 864.

General Instructions

Section references are to the Internal

Revenue Code unless otherwise noted.

Purpose of Form

An individual, estate, trust, organization,

or corporation claiming a credit for

increasing research activities; or any S

corporation, partnership, estate, or trust

that allocates the credit to its

shareholders, partners, or beneficiaries

must complete this form and attach it to

● Research conducted after the

beginning of commercial production.

● Research adapting an existing product

or process to a particular customer’s

need.

● Duplication of an existing product or

process. 

● Surveys or studies. 

● Research relating to certain

internal-use computer software.

● Research conducted outside the

United States, Puerto Rico, or a U.S.

possession.

● Research in the social scie

or humanities.

● Research funded by anoth

(or governmental entity).

See section 41 and Regula

sections 1.41-2 and 1.41-4 f

definitions and special rules.

The research credit is generally allowed

for expenditures paid or incurred for

qualified research. Qualified research

means research for which expenditures

may be treated as section 174

expenses. This research must be

undertaken for discovering information

that is technological in nature, and its

application must be intended for use in

developing a new or improved business

component of the taxpayer. In addition,

substantially all of the activities of the

research must be elements of a process

of experimentation relating to a new or

improved function, performance,

reliability, or quality. The research credit

generally is not allowed for the following

types of activities.

See section 41(f) and Tempo

Regulations section 1.41-6T 

section 1.141-6 for tax years 

after December 31, 2004, an

before May 24, 2005) for spe

related to:

● Aggregation of expenditure

members of controlled group

businesses under common c

● Allocation of the credit by

partnerships, estates, and tru

● Adjustments, if a major po

business is acquired or dispo

● Short tax years.

● The credit for increasing research

activities (research credit) is not allowed

for amounts paid or incurred after

December 31, 2005. However, pending

legislation may allow the credit for later

expenditures.

What’s New

● Certain amounts paid or incurred to

energy research consortia after August

8, 2005, are eligible for the research

credit. See the line 1 instructions for

further details.

● Amounts paid or incurred to certain

small businesses, universities, and

federal laboratories after August 8, 2005,

can be treated as contract research

expenses. See the line 8 instructions for

further details.

its income tax return. If allocating the

credit, see the instructions for line 43.

Form 6765 (200
Members of Controlled

Groups or Businesses Under

Common Control

Section A—Regular Credit

Line 3

Line 7

Line 8

Line 10

The fixed-base percentage 

start-up company is figured 

incremental credit in Section B. Under

the alternative incremental credit, a

smaller three-tiered fixed-base

percentage and reduced three-tiered

credit rate apply. You may want to figure

your credit both ways to see which gives

you the larger credit. However, once

elected, the alternative incremental

credit applies to the current tax year and

all later tax years, unless:

For purposes of figuring the credit, all

members of a controlled group of

corporations (as defined in section

41(f)(5) and Temporary Regulations

section 1.41-6T) (Regulations section

1.41-6 for tax years beginning after

December 31, 2004, and ending before

May 24, 2005)), and all members of a

group of businesses under common

control, are treated as a single taxpayer.

The credit allowed each member is

based on its proportionate share of

qualified research expenses and basic

research payments giving rise to the

group’s research credit. Use Section A

or B of Part I to figure the credit for the

entire group, but enter only this

member’s share of the credit on line 17

or line 41, whichever applies. Attach a

statement showing how this member’s

share of the credit was figured, and

write “See Attached” next to the entry

space for line 17 or line 41.

Skip this section and go to Section B if:

Enter the qualified organization base

period amount based on minimum basic

research amounts plus maintenance-ofeffort amounts for the three preceding

tax years. See section 41(e) for details.

Enter the amount you paid or incurred

for the rental or lease of computers used

in qualified research. The computer must

be located off your premises and you

must not be the operator or primary user

of the computer. Reduce this amount by

the amount that you (or any member of

a controlled group of corporations or

businesses under common control)

received or accrued for the right to use

substantially identical property.

The fixed-base percentage d

whether you are an existing c

a start-up company.

A start-up company is a ta

had both gross receipts and 

research expenses either:

● For the first time in a tax y

beginning after 1983, or

● For fewer than 3 tax years 

after 1983 and before 1989.

● For the first 5 tax years be

after 1993 for which you hav

research expenses, the perce

is 3%.

1. You are electing the alternative

incremental credit, or

2. You previously elected the

alternative credit and (a) for tax years

ending after May 23, 2005, are not

revoking the election or (b) for tax years

beginning after December 31, 2004, and

ending before May 24, 2005, have not

received permission to revoke the

election.

Line 2

Enter the amounts the corporation (not

to include S corporations, personal

holding companies, and service

organizations) paid in cash, under a

written contract, for basic research to a

qualified university, scientific research

organization, or grant organization. See

section 41(e) for details, including the

definitions of qualified organizations.

1. For tax years ending after May 23,

2005 (see Temporary Regulations

section 1.41-8T), you revoke the election

by completing Section A of Form 6765,

or

2. For tax years beginning after

December 31, 2004, and ending before

May 24, 2005, you receive IRS consent

to revoke the election. In the year the

consent is granted, attach the consent

to Form 6765 and the return.

● For the 6th tax year beginn

1993 for which you have qua

research expenses, divide th

qualified research expenses 

and 5th such tax years by th

gross receipts for those tax y

divide the result by 6.

● For the 7th tax year beginn

1993 for which you have qua

research expenses, divide th

qualified research expenses 

and 6th such tax years by th

gross receipts for those tax y

divide the result by 3.

● For the 8th tax year beginn

1993 for which you have qua

research expenses, divide th

qualified research expenses 

6th, and 7th such tax years b

aggregate gross receipts for 

years, then divide the result 

● For the 9th tax year beginn

1993 for which you have qua

research expenses, divide th

qualified research expenses 

6th, 7th, and 8th such tax ye

aggregate gross receipts for 

years, then divide the result 

Enter the amounts you paid or incurred

to energy research consortia after

August 8, 2005. In general, an energy

research consortium is any organization

described in section 501(c)(3), exempt

from tax under section 501(a), organized

and operated primarily to conduct

energy research, and not a private

foundation. See section 41(f)(6) for

further details.

● 100% of amounts you paid (or

incurred) after August 8, 2005, for

qualified energy research performed by:

an eligible small business, a university,

or a federal laboratory (see section

41(b)(3)(D) for definitions of those

entities). Also include payments to those

same entities to the extent they are

included as basic research payments in

line 2, not to exceed the base period

amount in line 3.

Enter the amounts you paid or incurred,

subject to the following limitations.

consortium to the extent they 

included as basic research p

line 2, not to exceed the bas

amount in line 3.

● 65% of amounts you paid 

for all other qualified researc

other person. Also include 65

payments to that person to t

they are included as basic re

payments in line 2, not to ex

base period amount in line 3

Note. Prepaid contract resea

expenses are considered pai

year the research is actually 

For tax years ending after May 23,

2005, the revocation must be on an

original return filed by the due date

(including extensions).

Any amount included on line 1 cannot

be included elsewhere on the return.

Do not include any amounts paid or

incurred for foreign energy research, i.e.,

energy research conducted outside the

United States, Puerto Rico, or any

possession of the United States.
Line 11

Line 17

Credit

Section C—Current Year Credit

Line 43

S corporations and partnerships.

Attach Form 6765 to your tax return, and

on Schedule K-1 report the credit

allocated to each shareholder or partner.

Electing large partnerships include this

credit in “general credits.”

Part II—Allowable Credit 

See the instructions for Form 3800 to

find out which credits are included in the

general business credit.

Line 50

Line 51

Reduce gross receipts by

returns and allowances. For a

foreign corporation, include

only gross receipts that are

effectively connected with a trade or

business in the United States (or in

Puerto Rico or a U.S. possession, if

applicable).

Enter the average annual gross receipts

(reduced by returns and allowances) for

the 4 tax years preceding the tax year

for which the credit is being determined.

You may be required to annualize gross

receipts for any short tax year. For a

foreign corporation, include only gross

receipts that are effectively connected

with a trade or business in the United

States (or in Puerto Rico or a U.S.

possession, if applicable).

If you do not elect the reduced credit,

which can only be claimed on an original

timely filed return (with extensions), you

must reduce your otherwise allowable

deduction for qualified research

expenses or basic research expenses by

the amount of the credit on this line. If

the credit exceeds the amount allowed

as a deduction for the tax year, reduce

the amount chargeable to the capital

account for the year for such expenses

by the amount of the excess. Attach a

schedule to your tax return that lists the

deduction amounts (or capitalized

expenses) that were reduced. Identify

Complete this section only if, instead of

the regular credit:

Pass-through entities should report the

amount on line 43 as follows. 

The credit allowed for the current year

may be limited based on your tax

liability. Use Part II to figure the

allowable credit unless you must file

Form 3800, General Business Credit. 

Who must file Form 3800. You must file

Form 3800 if you have: 

● A research credit from a passive

activity,

● More than one credit included in the

general business credit (other than a

credit from Form 8844, Form 6478, or

Section B of Form 8835), or

● A carryback or carryforward of any of

those credits.

See section 38(c)(5) for spec

apply to married couples filin

returns, controlled corporate 

regulated investment compa

estate investment trusts, and 

and trusts.

Although you may not owe A

generally must still compute 

minimum tax (TMT) to figure 

For a small corporation exem

AMT under section 55(e), ent

Otherwise, complete and atta

applicable AMT form or sche

on line 51 the TMT from the 

line of the form or schedule.

Estates and trusts. Allocate the credit

on line 43 between the estate or trust

and the beneficiaries in the same

proportion as income was allocated. In

the margin for line 43, the estate or trust

should enter its share of the credit. Label

it “1041 Portion” and use this amount in

Part II (or on Form 3800, if required) to

figure the credit to claim on Form 1041.

On Schedule K-1, report the share of

credit allocated to each beneficiary. CAUTION

1. You are electing the alternative

incremental credit, or

2. You previously elected the

alternative credit and on this return are

not revoking the election and have not

previously received permission to revoke

the election.

For special rules regarding the election

or revocation of the election by a

controlled group of corporations, see

Temporary Regulations section 1.41-8T

(Regulations section 1.41-6 for tax years

beginning after December 31, 2004, and

ending before May 24, 2005).

The fixed-base percentage for all

companies (existing and start-up) must

be rounded to the nearest 1/100th of

1% (that is, four decimal places) and

cannot exceed 16%. In addition, when

figuring your fixed-base percentage, you

must reflect expenses for qualified

research conducted in Puerto Rico or a

U.S. possession for all prior tax years

included in the computation.

If short tax years are involved, see

Regulations section 1.41-3(b).

Line 44

Enter the regular tax before credits from

the following line of the appropriate form

or schedule.

line of your return.

● Estates and trusts. Enter t

the amounts from Form 1041

G, lines 1a and 1b, or the am

the applicable line of your re

Line 45

Enter the alternative minimum 

from the following line of the 

form or schedule.

● Individuals. Enter the amou

Form 6251, line 35.

● Corporations. Enter the am

Form 4626, line 14.

● Estates and trusts. Enter th

from Form 1041, Schedule I, 

Line 47e

Include on lines 47e any amo

claimed on:

● Form 8834, Qualified Elect

Credit, line 20;

● Form 8910, Alternative Mo

Credit, line 18; and

● Form 8911, Alternative Fue

Refueling Property Credit, lin

● Individuals: Form 6251, lin

● Corporations: Form 4626, 

● Estates and trusts: Form 1

Schedule I, line 54.

Line 54

(Line 48 - Line 50) x

Taxable income for 

1040, line 43, or Fo

For an individual, estate, or t

credits on line 17 or 41, and 

limited to the amount of tax 

to your taxable income from 

proprietorship or your interes

partnership, S corporation, e

trust (pass-through entity) ge

credit. Figure the research cr

limitation separately for each 

enterprise by using the follow

formula:

Taxable income attr

sole proprietorship 

the pass-through en

The fixed-base percentage for an

existing company (any company that is

not a start-up company) is figured by

dividing the aggregate qualified research

expenses for the tax years beginning

after 1983 and before 1989 by the

aggregate gross receipts for those tax

years.

aggregate gross receipts for those tax

years, then divide the result by 1.2.

● For the 11th and later tax years

beginning after 1993 for which you have

qualified research expenses, divide the

aggregate qualified research expenses

for any 5 of the 5th through 10th such

tax years by the aggregate gross

receipts for those tax years.
Printed on recycled paper

The time needed to complete and file

this form will vary depending on

individual circumstances. The estimated

burden for individual taxpayers filing this

form is approved under OMB control

number 1545-0074 and is included in

the estimates shown in the instructions

for their individual income tax return. The

estimated burden for all other taxpayers

who file this form is shown below. The

estimated average time is:

If you have comments con

accuracy of these time estim

suggestions for making this 

simpler, we would be happy 

from you. See the instruction

return with which this form is 

Paperwork Reduction Act Notice. We

ask for the information on this form to

carry out the Internal Revenue laws of

the United States. You are required to

give us the information. We need it to

ensure that you are complying with

these laws and to allow us to figure and

collect the right amount of tax.

relating to a form or its instructions must

be retained as long as their contents

may become material in the

administration of any Internal Revenue

law. Generally, tax returns and return

information are confidential, as required

by section 6103.

research credit this year for that

business.

If you cannot use all of the research

credit because of the tax liability limit or

the taxable income limit above (line 54 is

less than line 43), carry the unused

credit back 1 year then forward up to 20

years. See the instructions for Form

3800.