Arkansas Administrative Code › Agency 133 - Arkansas Science & Technology Authority › Rule 133.00.08-001 - Research & Development Tax Credit Program Rules; and Technology Development Program Rules

Current through Register Vol. 49, No. 6, June, 2024
1.0 GENERAL INFORMATION
Act 759 of 1985 provides several tax credit incentives to Arkansas taxpayers to support research and educational program efforts at Arkansas colleges and universities. Act 1607 of 2007 amends the tax credit incentives.
Act 759 of 1985 allows the Arkansas Science & Technology Authority and the Arkansas Department of Higher Education to adopt certain rules specifically governing claims for tax credits for contributions to qualified research programs at qualified educational institutions.
These statutory provisions are codified as Arkansas Code sections 26-51-1101 through 26-51-1105.
1.1 PROGRAM NAME
These rules will govern the Arkansas Department of Higher Education and the Arkansas Science & Technology Authority's Research & Development Tax Credit Program.
1.2 PURPOSE
The purpose of the Research & Development Tax Credit Program is to provide incentive to Arkansas industry to participate in the Science & Technology Authority's Applied Research Grant Program, Basic Research Grant Program or similar research programs.
1.3 AUTHORIZATION
The Research & Development Tax Credit Program for qualified research programs is authorized by Sections 2 and 3 of Act 759 of 1985, the same being Arkansas Code section 11-51-1102. The power to establish rules governing this program is granted by Section 6 of Act 759 of 1985, the same being Arkansas Code section 26-51-1105.
2.0 PROGRAM DESCRIPTION
The Research & Development Tax Credit Program allows credits against a taxpayer's Arkansas state income tax for making certain qualified research expenditures, as well as certain donations or sales below cost of new machinery and equipment to a qualified research program.
2.1 LIMITS ON CREDIT
2.1.1 In the case of a qualified research expenditure, the amount of credit granted shall be thirty-three percent (33%) of the amount expended by the taxpayer in the tax year on the qualified research program.
2.1.2 In the case of a donation of new machinery or equipment, the amount of credit granted shall be thirty-three percent (33%) of the amount by which the cost is reduced.
2.1.3 In the case of a sale below cost of new machinery or equipment, the amount of credit granted shall be thirty-three percent (33%) of the amount by which the cost is reduced.
2.1.4 Total credit for qualified research expenditures, donations, and sales below cost shall be allowed up to one hundred percent (100%) of the net tax liability of the taxpayer after all other credits and reductions in tax have been calculated.
2.1.5 In the case of donations or sales below cost, the credit shall be claimed in the tax year of the donation or sale below cost, but all or any part of the unused credit may be carried over to and claimed in succeeding tax years until the credit is exhausted or until the end of nine tax years next succeeding the tax year of the donation or sale below cost, whichever occurs earlier.
2.1.6 In the case of a qualified research expenditure, the credit shall be claimed in the tax year in which the expense incurred for the qualified research is actually paid, but all or any part of any unused credit may be carried over to and claimed in succeeding tax years until the credit is exhausted or until the end of nine tax years next succeeding the tax year of the payment for the qualified research expenditure, whichever occurs earlier.
2.1.7 Any person claiming any credit granted by Act 759 of 1985 as amended for any expense, or contribution, or sale below cost shall not take any deduction under the Arkansas Income Tax Law for the same expense or contribution.