2006 Utah Code - 59-10-1012 — Tax credits for research activities conducted in the state -- Carry forward -- Commission to report modification or repeal of federal credits.

     59-10-1012.   Tax credits for research activities conducted in the state -- Carry forward -- Commission to report modification or repeal of federal credits.
     (1) (a) For taxable years beginning on or after January 1, 1999, but beginning before December 31, 2010, a claimant, estate, or trust meeting the requirements of this section shall qualify for the following nonrefundable tax credits for increasing research activities in this state:
     (i) a research tax credit of 6% of the claimant's, estate's, or trust's qualified research expenses for the current taxable year that exceed the base amount provided for under Subsection (4); and
     (ii) a tax credit for payments to qualified organizations for basic research as provided in Section 41(e), Internal Revenue Code of 6% for the current taxable year that exceed the base amount provided for under Subsection (4).
     (b) If a claimant, estate, or trust qualifying for a tax credit under Subsection (1)(a) seeks to claim the tax credit, the claimant, estate, or trust shall:
     (i) claim the tax credit or a portion of the tax credit for the taxable year immediately following the taxable year for which the claimant, estate, or trust qualifies for the tax credit;
     (ii) carry the tax credit or a portion of the tax credit forward as provided in Subsection (4)(f); or
     (iii) claim a portion of the tax credit and carry forward a portion of the tax credit as provided in Subsections (1)(b)(i) and (ii).
     (c) The tax credits provided for in this section do not include the alternative incremental credit provided for in Section 41(c)(4), Internal Revenue Code.
     (2) For purposes of claiming a tax credit under this section, a unitary group as defined in Section 59-7-101 is considered to be one claimant.
     (3) Except as specifically provided for in this section:
     (a) the tax credits authorized under Subsection (1) shall be calculated as provided in Section 41, Internal Revenue Code; and
     (b) the definitions provided in Section 41, Internal Revenue Code, apply in calculating the tax credits authorized under Subsection (1).
     (4) For purposes of this section:
     (a) the base amount shall be calculated as provided in Sections 41(c) and 41(h), Internal Revenue Code, except that:
     (i) the base amount does not include the calculation of the alternative incremental credit provided for in Section 41(c)(4), Internal Revenue Code;
     (ii) a claimant's, estate's, or trust's gross receipts include only those gross receipts attributable to sources within this state as provided in Section 59-10-118; and
     (iii) notwithstanding Section 41(c), Internal Revenue Code, for purposes of calculating the base amount, a claimant, estate, or trust:
     (A) may elect to be treated as a start-up company as provided in Section 41(c)(3)(B) regardless of whether the claimant, estate, or trust meets the requirements of Section 41(c)(3)(B)(i)(I) or (II); and
     (B) may not revoke an election to be treated as a start-up company under Subsection (4)(a)(iii)(A);
     (b) "basic research" is as defined in Section 41(e)(7), Internal Revenue Code, except that the term includes only basic research conducted in this state;
     (c) "qualified research" is as defined in Section 41(d), Internal Revenue Code, except that

the term includes only qualified research conducted in this state;
     (d) "qualified research expenses" is as defined and calculated in Section 41(b), Internal Revenue Code, except that the term includes only those expenses incurred in conducting qualified research in this state;
     (e) notwithstanding the provisions of Section 41(h), Internal Revenue Code, the tax credits provided for in this section shall not terminate if the credits terminate under Section 41, Internal Revenue Code; and
     (f) notwithstanding the provisions of Sections 39 and 41(g), Internal Revenue Code, governing the carry forward and carry back of federal tax credits, if the amount of a tax credit claimed by a claimant, estate, or trust under this section exceeds the claimant's, estate's, or trust's tax liability under this chapter for a taxable year, the amount of the tax credit exceeding the liability:
     (i) may be carried forward for a period that does not exceed the next 14 taxable years; and
     (ii) may not be carried back to a taxable year preceding the current taxable year.
     (5) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the commission may make rules for purposes of this section prescribing a certification process for qualified organizations to ensure that amounts paid to the qualified organizations are for basic research conducted in this state.
     (6) If a federal credit under Section 41, Internal Revenue Code, is modified or repealed, the commission shall report the modification or repeal to the Tax Review Commission within 60 days after the day on which the modification or repeal becomes effective.

Renumbered and Amended by Chapter 223, 2006 General Session