OMB No. 1545-0619 6765 Credit for Increasing Research Activities Form

Department of the Treasury

Internal Revenue Service

Attachment

Sequence No. 81

© Attach to your tax return.

Name(s) shown on return Identifying number

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

17 Are you electing the reduced credit under section 280C? © 

16

For Paperwork Reduction Act Notice, see instructions. Cat. No. 13700H Form 6765 (2008)

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

Section A—Regular Credit. Skip this section and go to Section B or C if you are electing or previously elected (and are not revoking)

the alternative incremental credit or the alternative simplified credit, respectively.

Section B—Alternative Incremental Credit. Skip this section if you are completing Section A or C.

Multiply line 29 by 1% (.01)

Subtract line 30 from line 28. If zero or less, enter -0-

Multiply line 29 by 1.5% (.015)

Subtract line 32 from line 28. If zero or less, enter -0-

Subtract line 33 from line 31

Subtract line 35 from line 28. If zero or less, enter -0-

Subtract line 36 from line 33

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 22 by 20% (.20)

20

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

the work opportunity credit)

21

Add lines 18 and 21

23

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

24

Enter the applicable percentage of contract research expenses (see

the line 8 instructions)

22

Total qualified research expenses. Add lines 24 through 27

26

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

27

19

20

21

23

24

22

26

27

28

29

30

31

32

33

34

35

36

37

28

29

30

31

32

33

34

35

36

37

1 Certain amounts paid or incurred to energy consortia (see instructions) 1

17

16

18 Certain amounts paid or incurred to energy consortia (see the line 1 instructions) 18

If “Yes,” multiply line 16 by 13% (.13). If “No,” multiply line 16 by 20% (.20) and see the instructions 

for the schedule that must be attached. Members of controlled groups or businesses under

common control: see instructions for the schedule that must be attached

Yes No

25 Cost of supplies 25

Multiply line 29 by 2% (.02)

2008
Form 6765 (2008) Page 2

Credit for increasing research activities from partnerships, S corporations, estates, and trusts

64

65

Section D—Summary

64

65

Add lines 61 and 62. Estates and trusts go to line 64; partnerships and S corporations, report

this amount on Schedule K; all others, report this amount on line 1c of Form 3800

Amount allocated to beneficiaries of the estate or trust (see instructions)

Estates and trusts: subtract line 64 from line 63. Report the credit on line 1c of Form 3800

Form 6765 (2008)

Multiply line 34 by 3% (.03)

Multiply line 37 by 4% (.04)

Multiply line 36 by 5% (.05)

Add lines 23, 38, 39, and 40

38

39

40

38

39

40

41 41

42

42 Are you electing the reduced credit under section 280C? © Yes No

If “Yes,” multiply line 41 by 65% (.65). If “No,” enter the amount from line 41 and see the line 17 

instructions for the schedule that must be attached. Members of controlled groups or businesses 

under common control: see instructions for the schedule that must be attached

Section B—Alternative Incremental Credit (continued)

Section C—Alternative Simplified Credit. Skip this section if you are completing Section A or B.

Certain amounts paid or incurred to energy consortia (see the line 1 instructions) 43

Basic research payments to qualified organizations (see the line 2

instructions) 44

43

44

Qualified organization base period amount (see the line 3 instructions) 45 45

46 Subtract line 45 from line 44. If zero or less, enter -0- 46

47 Add lines 43 and 46 47

48 Multiply line 47 by 20% (.20) 48

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

work opportunity credit) 49

49

Cost of supplies 50 50

Rental or lease costs of computers (see the line 7 instructions) 51 51

Enter the applicable percentage of contract research expenses (see

the line 8 instructions) 52

52

Total qualified research expenses. Add lines 49 through 52 53 53

Enter your total qualified research expenses for the prior 3 tax years. If 

you had no qualified research expenses in any one of those years, skip 

lines 55 and 56 54

54

Divide line 54 by 6.0 55 55

Subtract line 55 from line 53. If zero or less, enter -0- 56 56

● Line 56 by 12% (.12) for tax years ending before 2009,

57

57

58 Add lines 48 and 57 58

59

59

62 62

Are you electing the reduced credit under section 280C? © 

63

63

Yes No

If “Yes,” multiply line 58 by 65% (.65). If “No,” enter the amount from line 58 and see the line 17

instructions for the schedule that must be attached. Members of controlled groups or businesses 

under common control: see instructions for the schedule that must be attached

60

61

Enter the portion of the credit from Form 8932, line 2, that is attributable to wages that were also 

used to figure the credit on line 17, line 42, or line 59 (whichever applies)

Subtract line 60 from line 17, line 42, or line 59 (whichever applies). If zero or less, enter -0-

60

61

● Line 56 by 14% (.14) for tax years ending after 2008, or

● Line 53 by 6% (.06) if you skipped lines 55 and 56.

Multiply: %
Form 6765 (2008) Page 3

If you incur qualified clinical testing

expenses relating to drugs for certain

rare diseases, you can elect to claim

the orphan drug credit for these

expenses instead of the research

credit. See Form 8820, Orphan Drug

Credit.

Special Rules

General Instructions

Section references are to the Internal

Revenue Code unless otherwise

noted.

What’s New

● Surveys or studies. 

● Research conducted outside the

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

possession.

● Research in the social sciences,

arts, or humanities.

● Research funded by another person

(or governmental entity).

See section 41 and Regulations

sections 1.41-2 and 1.41-4 for other

definitions and special rules.

See section 41(f) and Regulations

sections 1.41-6, 1.41-6T, and 1.41-7

for special rules related to:

● Aggregation of expenditures for

members of controlled groups and

businesses under common control;

● Allocation of the credit by

partnerships, estates, and trusts; 

● Adjustments, if a major portion of a

business is acquired or disposed of;

and

● Short tax years.

● Research relating to certain

internal-use computer software.

For special rules concerning the

allocation and apportionment of

research and experimental

expenditures between U.S. and

foreign source income, see sections

861 through 864.

Specific Instructions

You can:

For special rules regarding the

election (or revocation of the election)

of the alternative incremental credit in

Section B by a controlled group of

corporations, see Regulations section

1.41-8.

● Claim the regular credit in 

Section A,

● Elect the alternative incremental

credit in Section B, or

● Elect the alternative simplified credit

in Section C.

You may want to figure your credit

using all of the methods for which you

are eligible to get the maximum credit

allowed.

Once elected, the alternative

incremental credit or the alternative

simplified credit applies to the current

tax year and all later tax years, unless

you revoke the election. The

revocation for the alternative

incremental credit must be made on

an original return filed by the due date

(including extensions). See Regulations

section 1.41-8T. The revocation of the

alternative incremental credit may not

be made on an amended return. To

revoke a previous election of the

alternative incremental credit,

complete Section A or C.

Section A—Regular Credit

Skip this section and go to Section B

or C if:

Use Form 6765 to figure and claim the

credit for increasing research

activities.

Who Must File

Qualified Research

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 its income tax return. If

you are a taxpayer that is not a

partnership or S corporation, and your

only source of this credit is from a

partnership, S corporation, estate, or

trust, you are not required to complete

or file this form, with the following

exception: you are a taxpayer that is an

estate or trust and the credit can be

allocated to beneficiaries. For more

details, see the Instructions for Form

1041, Schedule K-1, box 13.

● 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. 

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.

Member of 

Controlled Group or

Business Under

Common Control

For purposes of figuring the credit, all

members of a controlled group of

corporations (as defined in section

41(f)(1)(A) and (f)(5)) and all members

of a group of businesses under

common control (as defined in section

41(f)(1)(B)), are treated as a single

taxpayer. As a member, compute your

credit based on your proportionate

share of qualified research expenses

and basic research payments giving

rise to the group’s research credit for

Section A, B, or C. Enter your share of

the credit on line 17, 42, or 59,

whichever applies. Attach a statement

showing how your share of the credit

was figured, and write “See Attached” 

next to the entry space for line 17, 42,

or 59.

● The alternative incremental credit in

Section B will terminate for tax years

beginning after December 31, 2008.

● The general credit rate for the

alternative simplified credit increased

from 12 percent to 14 percent.

● The current year credit must be

reduced by the amount (if any) of the

credit for employer differential wage

payments.

Note: Corporations filing an amended

return to claim a refund of the

research credit, see Notice 2008-39,

I.R.B. 2008-13 684, available at

http://www.irs.gov/irb/2008-13_IRB/

index.html for information on where to

file.

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.
Form 6765 (2008) Page 4

Line 3

Line 7

Line 8

Line 10

The fixed-base percentage for a

start-up company is figured as follows.

Enter the qualified organization base

period amount based on minimum

basic research amounts plus

maintenance-of-effort 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 depends

on whether you are an existing

company or a start-up company.

A start-up company is a taxpayer

that had both gross receipts and

qualified research expenses either:

● For the first time in a tax year

beginning after 1983, or

● For fewer than 3 tax years beginning

after 1983 and before 1989.

● For the first 5 tax years beginning

after 1993 for which you have qualified

research expenses, the percentage is

3%.

Enter the amounts you paid or

incurred, subject to the following

limitations.

● 75% of amounts you paid (or

incurred) for qualified research by a

qualified research consortium (as

defined by section 41(b)(3)(C)(ii)). Also

include 75% of the payments to a

qualified research consortium to the

extent they are included as basic

research payments in line 2, not to

exceed the base period amount in 

line 3.

● 65% of amounts you paid (or

incurred) for all other qualified

research by any other person. Also

include 65% of the payments to that

person to the extent they are included

as basic research payments in line 2,

not to exceed the base period amount

in line 3.

Note. Prepaid contract research

expenses are considered paid in the

year the research is actually done.

● 100% of amounts you paid (or

incurred) 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.

● For the 7th tax year beginning after

1993 for which you have qualified

research expenses, divide the

aggregate qualified research expenses

● For the 8th tax year beginning after

1993 for which you have qualified

research expenses, divide the

aggregate qualified research expenses

for the 5th, 6th, and 7th such tax

years by the aggregate gross receipts

for those tax years, then divide the

result by 2.

● For the 9th tax year beginning after

1993 for which you have qualified

research expenses, divide the

aggregate qualified research expenses

for the 5th, 6th, 7th, and 8th such tax

years by the aggregate gross receipts

for those tax years, then divide the

result by 1.5.

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.

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.

● For the 10th tax year beginning after

1993 for which you have qualified

research expenses, divide the

aggregate qualified research expenses

for the 5th through 9th such tax years

by the 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.

Enter the amounts you paid or

incurred to energy research consortia

for energy research. Energy research

does not include any research that is

not qualified research. 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.

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.

Any amount included on line 1

cannot be included elsewhere on the

return.

● For the 6th tax year beginning after

1993 for which you have qualified

research expenses, divide the

aggregate qualified research expenses

for the 4th and 5th such tax years by

the aggregate gross receipts for those

tax years, then divide the result by 6.

If short tax years are involved, see

Regulations section 1.41-3(b).

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).

CAUTION

Line 1

1. You are electing the alternative

incremental credit,

3. You previously elected the

alternative incremental credit or the

alternative simplified credit and are not

revoking the election on this return.

2. You are electing the alternative

simplified credit, or

for the 5th and 6th such tax years by

the aggregate gross receipts for those

tax years, then divide the result by 3.
Form 6765 (2008) Page 5

Section B—Alternative

Incremental Credit

Complete this section only if, instead

of the regular credit or the alternative

simplified credit:

1. You are electing the alternative

incremental credit, or

2. You previously elected the

alternative incremental credit and are

not revoking the election on this

return.

Line 17

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 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

the lines of your return (schedule or

forms for capitalized items) on which

the reductions were made.

You are not required to provide the

information requested on a form that

is subject to the Paperwork Reduction

Act unless the form displays a valid

OMB control number. Books or

records 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.

Recordkeeping 16 hr., 15 min.

Learning about the law

or the form 2 hr., 22 min.

Preparing and sending the form

to the IRS 2 hr., 45 min.

If you have comments concerning

the accuracy of these time estimates

or suggestions for making this form

simpler, we would be happy to hear

from you. See the instructions for the

tax return with which this form is filed.

The estimated burden for all other

taxpayers who file this form is shown

below. The estimated average time 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.

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.

Section D—Summary

Line 64

Estates and trusts. Allocate the credit

for increasing research activities on

line 63 between the estate or trust and

the beneficiaries in the same

Section C—Alternative Simplified

Credit

Complete this section only if, instead

of the regular credit or the alternative

incremental credit:

1. You are electing the alternative

simplified credit, or

2. You previously elected the

alternative simplified credit and are not

revoking the election on this return.

For a tax year that the credit

terminates, the average annual gross

receipts for the four tax years

preceding the termination tax year is

prorated for the number of days the

credit applied during the tax year. For

more information, see section 41(h).

Line 54

Enter your qualified research expenses

for the prior three tax years. If the

credit terminates during the tax year,

prorate the qualified research

expenses for the prior three tax years

for the number of days the credit

applied during the tax year. For more

information, see section 41(h).

Line 60

If the credit on line 17, 42, or 59

includes amounts paid to employees

as wages, and you are also claiming a

credit for employer differential wage

payments based on payments you

made to the same employees, enter

on line 60 the portion of the credit

from Form 8932, line 2, that is

attributable to wages that were also

used to figure the credit on line 17,

line 42, or line 59 (whichever applies).

See Form 8932, Credit for Employer

Differential Wage Payments, for more

information on the credit.

Line 11

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).

proportion as income was allocated

and enter the beneficiaries’ share on

line 64.