NMSA 1978, § 7-9F-3 — Definitions

As used in the Technology Jobs and Research and Development Tax Credit Act:

# A.

"affiliate" means a person who directly or indirectly owns or controls, is owned or
controlled by or is under common ownership or control with another person through
ownership of voting securities or other ownership interests representing a majority of the
total voting power of the entity;

# B.

"annual payroll expense" means the wages paid or payable to employees in the
state by the taxpayer in the taxable year for which the taxpayer applies for an additional
credit pursuant to the Technology Jobs and Research and Development Tax Credit Act;

# C.

"base payroll expense" means the wages paid or payable by the taxpayer in the
taxable year prior to the taxable year for which the taxpayer applies for an additional
credit pursuant to the Technology Jobs and Research and Development Tax Credit Act,
adjusted for any increase from the preceding taxable year in the consumer price index
for the United States for all items as published by the United States department of labor
in the taxable year for which the additional credit is claimed. In a taxable year during
which a taxpayer has been part of a business merger or acquisition or other change in
business organization, the taxpayer's base payroll expense shall include the payroll
expense of all entities included in the reorganization for all positions that are included in
the business entity resulting from the reorganization;

# D.

"department" means the taxation and revenue department, the secretary of
taxation and revenue or any employee of the department exercising authority lawfully
delegated to that employee by the secretary;

# E.

"facility" means a factory, mill, plant, refinery, warehouse, dairy, feedlot, building
or complex of buildings located within the state, including the land on which it is located
and all machinery, equipment and other real and tangible personal property located at
or within it and used in connection with its operation;

# F.

"local option gross receipts tax" means a tax authorized to be imposed by a
county or municipality upon a taxpayer's gross receipts, as that term is defined in the
Gross Receipts and Compensating Tax Act [Chapter 7, Article 9 NMSA 1978], and
required to be collected by the department at the same time and in the same manner as
the gross receipts tax;

# G.

"qualified expenditure" means an expenditure or an allocated portion of an
expenditure by a taxpayer in direct connection with qualified research, essential for
conducting qualified research at a qualified facility, including expenditures for depletable
land and rent paid or incurred for land, improvements, the allowable amount paid or
incurred to operate or maintain a facility, buildings, equipment, computer software,
computer software upgrades, consultants and contractors performing work in New
Mexico, wages paid for employees conducting qualified research in New Mexico at a
qualified facility, technical books and manuals and test materials, but not including any
expenditure on property that is owned by a municipality or county in connection with an
industrial revenue bond project, property for which the taxpayer has received any credit
pursuant to the Investment Credit Act [Chapter 7, Article 9A NMSA 1978], property that
was owned by the taxpayer or an affiliate before July 3, 2000 or research and
development expenditures reimbursed by a person who is not an affiliate of the
taxpayer. If a "qualified expenditure" is an allocation of an expenditure, the cost
accounting methodology used for the allocation of the expenditure shall be the same
cost accounting methodology used by the taxpayer in its other business activities;

# H.

"qualified facility" means a facility in New Mexico at which qualified research is
conducted other than a facility operated by a taxpayer for the United States or any
agency, department or instrumentality thereof;

# I.

"qualified research" means research:
(1) that is undertaken for the purpose of discovering information:
(a) that is technological in nature; and
(b) the application of which is intended to be useful in the development of a
new or improved business component of the taxpayer; and
(2) substantially all of the activities of which constitute elements of a process
of experimentation related to a new or improved function, performance, reliability or
quality, but not related to style, taste or cosmetic or seasonal design factors;

# J.

"qualified research and development small business" means a taxpayer that:
(1) employed no more than fifty employees as determined by the number of
employees for which the taxpayer was liable for unemployment insurance coverage in
the taxable year for which an additional credit is claimed;
(2) had total qualified expenditures of no more than five million dollars
($5,000,000) in the taxable year for which an additional credit is claimed; and
(3) did not have more than fifty percent of its voting securities or other equity
interest with the right to designate or elect the board of directors or other governing
body of the business owned directly or indirectly by another business;

# K.

"rural area" means any area of the state other than the state fairgrounds, an
incorporated municipality with a population of thirty thousand or more according to the
most recent federal decennial census and any area within three miles of the external
boundaries of an incorporated municipality with a population of thirty thousand or more
according to the most recent federal decennial census;

# L.

"taxpayer" means any of the following persons, other than a federal, state or
other governmental unit or subdivision or an agency, department, institution or
instrumentality thereof:
(1) a person liable for payment of any tax;
(2) a person responsible for withholding and payment or collection and
payment of any tax;
(3) a person to whom an assessment has been made if the assessment
remains unabated or the assessed amount has not been paid; or
(4) for purposes of the additional credit against the taxpayer's income tax
pursuant to the Technology Jobs and Research and Development Tax Credit Act and to
the extent of their respective interest in that entity, the shareholders, members, partners
or other owners of:
(a) a small business corporation that has elected to be treated as an S
corporation for federal income tax purposes; or
(b) an entity treated as a partnership or disregarded entity for federal income
tax purposes; and

# M.

"wages" means remuneration for services performed by an employee in New
Mexico for an employer, not to exceed a maximum annual wage of five hundred
thousand dollars ($500,000) per employee.