Amount of credit and applicable procedures

# (a)

Credit calculation. — (1) General rule. — A taxpayer may elect a Delaware research and development tax credit for the taxable year equal to:

# (1)

10% of the excess of the taxpayer’s total Delaware qualified research and development expenses for the taxable year over the taxpayer’s Delaware base amount, or (2) 50% of Delaware’s apportioned share of taxpayer’s federal research and development tax credit calculated using the alternative simplified credit method under § 41(c) (5) of the Internal Revenue Code of 1986 (26 U.S.C. § 41(c) (5)), using federal definitions and methodology. Delaware’s apportioned share of the federal credit shall be the amount of the alternative simplified credit the taxpayer can claim under § 41(c) (5) (26 U.S.C. § 41(c) (5)), multiplied by a percentage equal to the ratio of the taxpayer’s Delaware qualified research and development expenses for the taxable year to the taxpayer’s total qualified research and development expenses for the taxable year. A taxpayer’s Delaware research and development tax credit determination election shall be an annual election, and shall be independent of taxpayer’s federal research and development tax credit determination.

# (2)

Alternative calculation for small businesses. — In the case of a small business, paragraph (a)(1) of this section shall be applied by substituting “20%” for “10%” and by substituting “100%” for “50%.” For the purposes of this subsection, “small business” means any taxpayer with average annual gross receipts, as determined by § 41(c)(1)(B) of the Internal Revenue Code of 1986 (26 U.S.C. § 41(c)(1)(B)), not in excess of the applicable threshold of $20,000,000. Taxpayers making use of the alternative calculation provided in this paragraph (a)(2) must conform to the definition of “small business” set forth herein without regard to the method by which the taxpayer calculates its federal research and development tax credit. The level of the applicable threshold in this subsection is subject to annual adjustment as more fully set forth in § 515 of this title.

# (b)

A research and development tax credit shall be applied against the taxpayer’s qualified tax liability for the taxable year in which the qualified research and development expenses were taken into account for purposes of Delaware income taxation. In the case of partnerships, the credit shall be allocated among partners as provided in § 41(f)(2)(B) of the Internal Revenue Code of 1986 (26 U.S.C. § 41(f)(2)(B)).

# (c)

If the taxpayer cannot use the entire amount of the approved research and development tax credit, such unused credit shall be paid to it in the nature of a tax refund.

Amendment history

72 Del. Laws, c. 23, § 4; 77 Del. Laws, c. 329, § 64(c); 79 Del. Laws, c. 298, § 1; 80 Del. Laws, c. 207, § 2

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In this title (40 sections)

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