R&D Tax Credit

§ 41. Credit for increasing research activities(a) General ruleFor purposes of section 38, the research credit determined under this section for the taxable year shall be an amount equal to the sum of—(1) 20 percent of the excess (if any) of—(A) the qualified research expenses for the taxable year, over (B) the base amount, (2) 20 percent of the basic research payments determined under subsection (e)(1)(A), and (3) 20 percent of the amounts paid or incurred by the taxpayer in carrying on any trade or business of the taxpayer during the taxable year (including as contributions) to an energy research consortium for energy research. (b) Qualified research expensesFor purposes of this section—(1) Qualified research expensesThe term “qualified research expenses” means the sum of the following amounts which are paid or incurred by the taxpayer during the taxable year in carrying on any trade or business of the taxpayer—(A) in-house research expenses, and (B) contract research expenses. (2) In-house research expenses(A) In generalThe term “in-house research expenses” means—(i) any wages paid or incurred to an employee for qualified services performed by such employee, (ii) any amount paid or incurred for supplies used in the conduct of qualified research, and (iii) under regulations prescribed by the Secretary, any amount paid or incurred to another person for the right to use computers in the conduct of qualified research. Clause (iii) shall not apply to any amount to the extent that the taxpayer (or any person with whom the taxpayer must aggregate expenditures under subsection (f)(1)) receives or accrues any amount from any other person for the right to use substantially identical personal property. (B) Qualified servicesThe term “qualified services” means services consisting of—(i) engaging in qualified research, or (ii) engaging in the direct supervision or direct support of research activities which constitute qualified research. If substantially all of the services performed by an individual for the taxpayer during the taxable year consists of services meeting the requirements of clause (i) or (ii), the term “qualified services” means all of the services performed by such individual for the taxpayer during the taxable year. (C) SuppliesThe term “supplies” means any tangible property other than—(i) land or improvements to land, and (ii) property of a character subject to the allowance for depreciation. (D) Wages(i) In generalThe term “wages” has the meaning given such term by section 3401(a). (ii) Self-employed individuals and owner-employeesIn the case of an employee (within the meaning of section 401(c)(1)), the term “wages” includes the earned income (as defined in section 401(c)(2)) of such employee. (iii) Exclusion for wages to which work opportunity credit appliesThe term “wages” shall not include any amount taken into account in determining the work opportunity credit under section 51(a).