Or. Admin. R. 150-317-0300 - Research Tax Credit: Alternative Computation

150-317-0300
Research Tax Credit: Alternative Computation

(1) The research credit based on Oregon sales is the lesser of the following:

(a) Five percent of the amount by which the qualified research expenses exceed 10 percent of Oregon sales,

(b) $10,000 times the number of percentage points by which the qualifying research expenses exceed 10 percent of Oregon sales; or

(c) The taxpayer’s liability after other credits.

(2) For tax years beginning on or after January 1, 2006, the credit may not exceed $2,000,000. The limit applies to the consolidated group when a consolidated Oregon return is filed.

(3) For tax years beginning on or after January 1, 1995 and before January 1, 2006, the credit may not exceed $500,000. The limit applies to the consolidated group when a consolidated Oregon return is filed.

(4) For tax years beginning before January 1, 1995, the credit may not exceed $50,000 or one-third of the excise tax liability of the taxpayer before credits, whichever is less. These limits apply to the consolidated group when a consolidated Oregon return is filed.

(5) Credits otherwise allowable for tax years beginning before January 1, 1995 and not used in such years may not be carried forward. Credits otherwise allowable for tax years beginning on or after January 1, 1995 and not used in such years may be carried forward for up to 5 years.

Example: A corporation has 1994 Oregon sales of $40,000,000, qualified research expenses of $4,900,000 and Oregon excise tax of $264,000 before credits. The allowable 1994 credit is calculated as follows:

Credit before limitations:

Qualified research expenses — $4,900,000

Less: Oregon sales — $40,000,000 x .10

10% of Oregon sales — (4,000,000)

Excess — $900,000 x .05

Credit before limitations — $45,000

Limitations:

Qualified research expenses in

excess of 10% of Oregon sales — $900,000

Divide by Oregon sales — ÷ 40,000,000

Excess percentage points — 2.25

Multiply by $10,000 — x $10,000

$22,500

Maximum credit amount — $50,000

One-third of excise tax liability before credits ($264,000 ÷ 3) $88,000

The credit allowed is $22,500.