West Virginia Code of State Rules › Agency 110 - Tax › Title 110 - LEGISLATIVE RULE STATE TAX DEPARTMENT › Series 110-13Q - Commercial Patent Incentives Tax Credit › Section 110-13Q-3 - Overview of the Credits

Current through Register Vol. XLI, No. 28, July 12, 2024
3.1. The
				tax incentive for developing patents in this State is a credit equal to 20% of
				the royalties, license fees or other consideration received by the developer of
				a patent in the taxable year who has an agreement, as defined in Subsection 2.1
				of this rule, except as otherwise provided in this section. A new tax credit
				shall not accrue for any royalties, license fees or other consideration
				received after December 31, 2016.
3.1.a. A
				credit is not allowed under Subsection 3.1 or 3.2 of this rule for a patent
				developed entirely outside this State.
3.1.b. When a patent has been developed
				through activity in this State under Subsection 3.1., and through activity in
				one or more other states, any royalties, license fees or other consideration
				received by the developer of the patent must be multiplied by a fraction, the
				numerator of which is the direct costs of developing the patent in this State
				under an agreement, and the denominator of which is the total direct costs of
				developing the patent. The product of this calculation is to be used when
				determining the credit allowed under Subsection 3.1 or 3.2 of this
				rule.
3.1.c. If a person other than
				a developer of the patent receives a portion of a royalty that would be
				eligible for a tax credit under Subsection 3.1 or 3.2 of this rule because of a
				business association, licensing agreement or otherwise, that person may receive
				the tax credit allowable only as to the portion of royalties that person
				actually receives;
3.1.d. Unused
				credit accrued under Subsection 3.1 or 3.2 of this rule may be carried forward
				until used only for a period of nine consecutive years after the taxable year
				in which the credit allowed by this section is first available.
3.1.e. A credit is not allowed under
				Subsection 3.1 or 3.2 of this rule for a patent if it was sold, leased or
				licensed to a third party prior to January 1, 2011, or before that day if it
				was reduced to practice for purely commercial purposes by the developer or a
				person related to the developer, as that term is defined in subsection (b),
				Section 267 of the Internal Revenue Code of 1986, as amended, and in W. Va.
				Code §§
										11-21-9 or
				11-24-3;
				and
3.1.f. A credit is not allowed
				under Subsection 3.1 or 3.2 of this rule beginning with the eleventh taxable
				year after the patent was first directly used in a manufacturing process or
				product.
3.1.g. A credit is not
				allowed under this rule for any activity, investment, assets, or expenditures
				for which any of the tax credits authorized under W. Va. Code §§
										11-13D-1
				et seq.,
				11-13E-1
				et seq.,11-13Q-1 et seq.,
				11-13R-1
				et seq.,
				11-13S-1
				et seq., or 11-13X-1 et seq., have been authorized, taken or allowed.
3.1.h. A credit is not allowed under this
				rule for any activity, investment, assets, or expenditures for which the tax
				credits authorized under W. Va. Code §§
										18B-13-1,
				et. seq., have been, authorized, taken or allowed.