Research and Development Credit:
Minnesota R&D Credit: Computation clarified
Recently the Minnesota Tax Court clarified the base period calculation for a taxpayer that can provide significant changes to the R&D credit calculation in the state. These changes also could be applied to a taxpayer’s current calculation when under exam by the state of Minnesota.
The Minnesota Tax Court has held that in computing the Minnesota research and development credit, for the tax year at issue, Minnesota “base amount” had to be computed using federal gross receipts in the denominator of the fixed-base percentage. However, it also held that Minnesota law incorporated the federal minimum base amount provision as part of the state-law definition of “base amount,” and did not incorporate the federal election of alternative simplified credit. (General Mills, Inc. v. Commissioner of Revenue, Minn. Tax Ct., Docket No. 9016-R, 08/17/2018)
The interesting point in this case is that the Tax Court determined that the R&D legislation, specified to use Minnesota qualified research expenses, but did not specify to use Minnesota gross receipts. So, based on this court case a taxpayer would use Minnesota qualified research expenses and Federal gross receipts to calculate its base amount. Also, since the court clarified that the simplified credits was unavailable, taxpayers will still need to utilize the regular credit method, which can be difficult to determine expenses and gross receipts from that time period.
Multi-State Incentives Highlight:
Sign up below for the webinar (September 27th, 2018) on the state incentive process utilized by CFO Services’ clients. In this webinar CFO Services will cover the typical issues and solutions to gain, track, and manage state incentives. Lastly, CFO Services will cover a couple features of its Business Incentives Portal.
R&D Credit planning for next year
Are you starting to plan for your budget next year, and are interested in a competitive bid for R&D credits?
Complete our quick three questions survey and let us know if you want to have CFO Services contact you for planning the R&D credit for next year.
2018 Conference sponsorship and presentations:
CFO Services, is constantly out across the country reaching out to clients at conferences and events. In addition, we are speaking and helping to build knowledge through the tax community on credits, incentives, and technology. Check out some of the events in 2018, and don’t forget to stop by if you are at one of these events.
- February 2018: NJ TEI Chapter Day
- “Purchased State Credits: Too Good to be True & How not to lose them”
- February 2018: Houston TEI Tax School
- May 2018: Association of Computers and Taxation annual conference
- “Cloud Computing and Maximizing Credits and Incentives”
- June 2018: Southeast regional TEI conference (Hilton Head)
- June 2018: West regional TEI conference (Phoenix)
- September 27th, 2018: Webinar on CFO Services state incentives process
- October 2018: R&D Credit & ASC 730, how do they relate? (CFO Webinar)
- More to follow in 2018