Louisiana Administrative Code › Title 13 - ECONOMIC DEVELOPMENT › Part I - Financial Incentive Programs › Chapter 29 - Research and Development Tax Credit › Section I-2903 - Definitions

Current through Register Vol. 50, No. 6, June 20, 2024
A. Terms not otherwise defined in this Chapter shall have the
				  same meaning given to them in
				  R.S.
				  47:6015 unless the context clearly requires
				  otherwise.
B. In this Chapter, the following terms shall have the
				  meaning provided in this Section, unless the context clearly requires
				  otherwise.
Affiliate
-
a company that
				  shares more than 50 percent common ownership or other means of control with
				  respect to another company.
Base Amount
-
a. If the taxpayer is an entity that employs fifty or more
				  persons, the base amount shall be eighty percent of the average annual
				  qualified research expenses within Louisiana during the three years preceding
				  the taxable years.
b. If the taxpayer is an entity that employs less than fifty
				  persons, the base amount shall be fifty percent of the average annual qualified
				  research expenses within Louisiana during the three preceding taxable years.
Business Component
-
any
				  product, process, computer software, technique, formula, or invention which is
				  to be held for sale, lease, license, or used in a trade or business of the
				  taxpayer.
Credit Certification
-a certification by LED
				  of the amount of the research and development tax credit earned by a person for
				  a particular tax year.
Custom Fabricator
or
Custom
				  Manufacturer
-
companies that assemble, fabricate, or
				  manufacturer parts, equipment, assemblies, vessels, software or other products
				  ("specified item") in response to specific design criteria and delivery
				  schedule provided by the customer/client.
a. The typical business model acquisition process utilized by
custom fabricators
and/or manufacturers is as follows:
i. the customer/client providing the
custom
				  fabricator
and/or manufacturer with the detail specific design
				  criteria for the specified item in a document generally referred to as a
				  "request for proposal";
ii. after review and analysis, the
custom
				  fabricator
and/or manufacturer submits a "proposal" to the
				  customer/client in which they commit to a specific price and delivery schedule
				  to assemble, fabricate, or manufacturer the specified item requested by the
				  customer/client in their request for proposal;
iii. if the proposal is acceptable, the customer/client will
				  generally issue a "purchase order" commitment document to the
custom
				  fabricator
and/or manufacturer agreeing to the terms of their
				  proposal, and authorizing the custom fabricator or manufacturer to begin work
				  per their proposal; and
iv. although the
custom fabricator
or
				  manufacturer generally commits to a fixed price to produce the requested item,
				  they have effectively negated most, if not all, material or unusual commercial
				  transaction risks by their ability to analyze the required design criteria
				  before committing to a specific price and delivery schedule within their
				  proposal.
Custom Manufacturing or Custom
				  Fabricating
-the business of companies (custom fabricators and/or
				  manufacturers) that assemble, fabricate, or manufacturer parts, equipment,
				  assemblies, vessels, software or other products ("specified item") in response
				  to specific design criteria and delivery schedule provided by the
				  customer/client.
a. The typical business model acquisition process utilized by
				  custom fabricators and/or manufacturers is as follows:
i. the customer/client providing the custom fabricator and/or
				  manufacturer with the detail specific design criteria for the specified item in
				  a document generally referred to as a "request for proposal";
ii. after review and analysis, the custom fabricator and/or
				  manufacturer submits a "proposal" to the customer/client in which they commit
				  to a specific price and delivery schedule to assemble, fabricate, or
				  manufacturer the specified item requested by the customer/client in their
				  request for proposal;
iii. if the proposal is acceptable, the customer/client will
				  generally issue a "purchase order" commitment document to the custom fabricator
				  and/or manufacturer agreeing to the terms of their proposal, and authorizing
				  the custom fabricator or manufacturer to begin work per their proposal;
				  and
iv. although the custom fabricator or manufacturer generally
				  commits to a fixed price to produce the requested item, they have effectively
				  negated most, if not all, material or unusual commercial transaction risks by
				  their ability to analyze the required design criteria before committing to a
				  specific price and delivery schedule within their proposal.
LED
-Louisiana Department of Economic
				  Development.
Person
-any natural
person
or legal entity including an individual, corporation, partnership, or limited
				  liability company.
Professional Services Firm-
a firm who is
				  primarily engaged in work which requires specialized education, knowledge,
				  labor, judgment or is predominantly mental or intellectual in nature; and which
				  may require the holding of a professional license. These types of firms engage
				  in activities which include, but are not limited to, architecture, engineering,
				  legal services and accounting.
Qualified Research Expenses in the
				  State
-expenses for qualified research as defined under
				  26 U.S.C. §
										41(d) ("qualified research")
				  that are qualified research expenses under
				  26 U.S.C. §
										41(b) ("qualified research
				  expenses") and meet the following requirements:
a. wages described in  26 U.S.C. §
										41 (b)(2)(A)(i)  shall be
				  paid to individuals who are residents of Louisiana and perform their services
				  in Louisiana;
b. supplies described in  26 U.S.C. §
										41 (b)(2)(A)(ii)  shall be
				  consumed in Louisiana;
c. expenses for the right to use computers as described in  26 U.S.C. §
										41 (b)(2)(A)(iii)  shall be for the use of computers located in
				  Louisiana; and
d. contract research expenses as described in  26 U.S.C. §
										41 (b)(3)  shall be for services performed in Louisiana;
e.
				  26 U.S.C. §
										41(d) also excludes
				  expenditures associated with certain activities from the definition of
				  qualified research. These activities include:
i. research conducted after the beginning of commercial
				  production;
ii. activities related to the adaptation of an existing
				  business component to a particular customer's requirements or needs;
iii. activities related to the reproduction, in whole or in
				  part, of an existing business component from a physical examination of the
				  business component, plans, blueprints, detailed specifications or publically
				  available information with respect to such component;
iv. activities related to management functions or techniques,
				  efficiency surveys, market research, testing or development, routine data
				  collection or routine testing or inspections for quality controls;
v. research conducted using the social sciences including
				  economics and business management, as well as behavioral sciences, arts and
				  humanities; and
vi. research funded by a contract, grant, or otherwise by
				  another person or governmental entity.
Research and Development Tax
				  Credits
-credits against Louisiana income or corporation franchise
				  taxes that are earned by a person pursuant to the provisions of the Research
				  and Development Tax Credit Program provided by
				  R.S.
				  47:6015.
AUTHORITY NOTE:
				  Promulgated in accordance with
				  R.S.
				  47:6015.