Form 6765 - Credit for Increasing Research Activities

Use Form 6765 to figure and claim the credit for increasing research activities (research credit), to elect the reduced credit under section 280C, and to elect to claim a certain amount of the credit as a payroll tax credit against the employer portion of social security taxes.

Grant Deadline

Deadline not available

Funding Amount

Deadline not available

Type of Grant

Tax Credit

Sectors

Software, research and discovery

Demographics

Incorporation

Perks

Region Restriction

This grant is restricted to whole of United States

Keywords

transforming, tax credit, certain types, Payroll Portion, Social Security, Increasing Research, Security Es

Age Restriction

This grant is age restricted from 18 to 100

Eligibility and Requirements

Qualified Research

The research credit is generally allowed for expenses paid or incurred for qualified research. Qualified research means research for which expenses may be treated as section 174 expenses. This research must be undertaken for discovering information that is technological in nature, and its application must be intended for use in developing a new or improved business component of the taxpayer. In addition, substantially all of the activities of the research must be elements of a process of experimentation relating to a new or improved function, performance, reliability, or quality. These tests to determine qualified research must be applied separately with respect to each business component of the taxpayer. The research credit generally isn’t allowed for the following types of activities.

Research conducted after the beginning of commercial production.
Research adapting an existing product or process to a particular customer’s need.
Duplication of an existing product or process.
Surveys or studies.
Research relating to certain internal-use computer software.
Research conducted outside the United States, Puerto Rico, or a U.S. possession.
Research in the social sciences, arts, or humanities.
Research funded by another person (or governmental entity).

If you incur qualified clinical testing expenses relating to drugs for certain rare diseases, you can elect to claim the orphan drug credit for these expenses instead of the research credit. See Form 8820, Orphan Drug Credit.See section 41 and Regulations sections 1.41-2 and 1.41-4 for other definitions and special rules.

Eligible Small Business (For Purposes of Offsetting AMT Only)

An eligible small business is:

A corporation whose stock isn’t publicly traded,
A partnership, or
A sole proprietorship.

The average annual gross receipts of the corporation, partnership, or sole proprietorship for the 3-tax-year period preceding the tax year of the credit can’t exceed $50 million. Gross receipts for any tax year must be reduced by returns and allowances made during the year. Any reference to your business also includes a reference to any predecessor of your business. If your business wasn’t in existence for the entire 3-year period, base your average annual gross receipts on the period your business existed. Also, if your business had a tax year of less than 12 months, your gross receipts must be annualized by multiplying the gross receipts for the short period by 12 and dividing the result by the number of months in the short period.

Note. Gross receipts must meet the definition under section 448(c)(2) and (3) and Regulations section 1.448-1T(f)(2)(iv).

Member of controlled group, business under common control, or affiliated group. For purposes of the gross receipts test, all members of a controlled group of corporations (as defined in section 52(a)) and all members of a group of businesses under common control (as defined in section 52(b)) are treated as a single person; and all employees of the members of an affiliated service group (as defined in sections 414(m) and (o)) shall be treated as employed by a single person.

Treatment of partners and S corporation shareholders. A partner or S corporation shareholder can’t be treated as an eligible small business unless both the partnership or S corporation and the partner or S corporation shareholder meet the gross receipts test as discussed under Eligible Small Business, earlier, for the tax year that the credit is treated as a current year general business credit.

Qualified Small Business (Payroll Tax Credit Election)

A qualified small business is a corporation (including an S corporation) or partnership with:

Gross receipts of less than $5 million for the tax year, and
No gross receipts for any tax year before the 5-tax-year period ending with the tax year.

Any other person may be considered a qualified small business if the person meets the requirements of (1) and (2) above, taking into account the aggregate gross receipts received in all the trades or businesses.The term “gross receipts” for purposes of determining whether your business is a qualified small business means gross receipts as determined under section 448(c)(3) (without regard to subparagraph (A) thereof) and Regulations sections 1.448-1T(f)(2)(iii) and (iv). The definition of gross receipts under section 41(c)(6) and Regulations section 1.41-3(c) doesn’t apply for this purpose. Any reference to your trade or business also includes a reference to any predecessor of your trade or business. Also, if your trade or business had a tax year of less than 12 months, your gross receipts must be annualized by multiplying the gross receipts for the short period by 12 and dividing the result by the number of months in the short period.A qualified small business doesn’t include a tax-exempt organization under section 501.

Grant Application website

https://www.irs.gov/instructions/i6765