Code Section 41
| Code Section | Effective Date | Name of Act | Name of Provision | 10yr Revenue Estimate ($millions) |
|---|---|---|---|---|
| 41 | 12/31/2011 | The American Taxpayer Relief Act of 2012 | Research credit | -14,324 |
| 41 | 12/31/2009 | The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 | Research credit | -13,272 |
Research credit
Explanation of Provision
The provision extends the research credit for two years (through 2013). Under the provision, the special rules for taxpayers under common control and the special rules for computing the credit when a major portion of a trade or business (or unit thereof) changes hands are modified. Qualified research expenses paid or incurred by the disposing taxpayer in a taxable year that includes or ends with a change in ownership are treated as current year qualified research expenses of the disposing taxpayer and such expenses are not treated as current year qualified research expenses of the acquiring taxpayer. Further, the disposing taxpayer’s and acquiring taxpayer’s base period amounts are adjusted by a pro-rated amount. In addition, the credit allowable to each member of a controlled group of corporations or each member of a group of businesses under common control is determined on a proportionate basis to its share of the current year aggregate qualified research expenses (i.e., the gross qualified research expense allocation method).351
Research credit
Explanation of Provision
The provision extends the research credit for two years, through December 31, 2011.
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351- The provision overturns the stand-alone entity credit approach contained in Treas. Reg. sec. 1.41–6(c).
-Return to Explanation of Provision