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years by the aggregate gross receipts for those tax years,
then divide the result by 6.
•
For the 7th tax year beginning after 1993 for which you
have qualified research expenses, divide the aggregate
qualified research expenses for the 5th and 6th such tax
years by the aggregate gross receipts for those tax years,
then divide the result by 3.
•
For the 8th tax year beginning after 1993 for which you
have qualified research expenses, divide the aggregate
qualified research expenses for the 5th, 6th, and 7th such tax
years by the aggregate gross receipts for those tax years,
then divide the result by 2.
•
For the 9th tax year beginning after 1993 for which you
have qualified research expenses, divide the aggregate
qualified research expenses for the 5th, 6th, 7th, and 8th
such tax years by the aggregate gross receipts for those tax
years, then divide the result by 1.5.
•
For the 10th tax year beginning after 1993 for which you
have qualified research expenses, divide the aggregate
qualified research expenses for the 5th through 9th such tax
years by the aggregate gross receipts for those tax years,
then divide the result by 1.2.
•
For the 11th and later tax years beginning after 1993 for
which you have qualified research expenses, divide the
aggregate qualified research expenses for any 5 of the 5th
through 10th such tax years by the aggregate gross receipts
for those tax years.
The fixed-base percentage for an existing company (any
company that isn’t a start-up company) is figured by dividing
the aggregate qualified research expenses for the tax years
beginning after 1983 and before 1989 by the aggregate gross
receipts for those tax years.
The fixed-base percentage for all companies (existing and
start-up) must be rounded to the nearest 1/100th of 1% (that
is, four decimal places) and can’t exceed 16%. In addition,
when figuring your fixed-base percentage, you must reflect
expenses for qualified research conducted in Puerto Rico or
a U.S. territory for all prior tax years included in the
computation.
If short tax years are involved, see Regulations section
1.41-3(b).
Reduce gross receipts by returns and allowances.
For a foreign corporation, include only gross receipts
that are effectively connected with a trade or
business in the United States (or in Puerto Rico or a U.S.
territory, if applicable).
Line 11
Enter the average annual gross receipts (reduced by returns
and allowances) for the 4 tax years preceding the tax year for
which the credit is being determined. You may be required to
annualize gross receipts for any short tax year. For a foreign
corporation, include only gross receipts that are effectively
connected with a trade or business in the United States (or in
Puerto Rico or a U.S. territory, if applicable).
For a tax year that the credit terminates, the average
annual gross receipts for the 4 tax years preceding the
termination tax year is prorated for the number of days the
credit applied during the tax year.
Line 17
If you are electing the reduced research credit, you must
complete Form 6765 (even if no research credits are claimed
on the original return) and clearly indicate your intent to make
the election. In order for the election to apply, the Form 6765
must be filed with your original timely filed (including
extensions) return for the tax year. Once made, the election is
irrevocable for that tax year.
Checking the box on line 17 or line 34 to elect the
reduced research credit when no research credits are
claimed on the original return doesn’t mean that you
are claiming the regular research credit or that you are
making the ASC election.
If you don't elect the reduced credit, and if the amount of
the credit determined for the taxable year exceeds the
amount allowable as a deduction for such taxable year for
qualified research expenses or basic research expenses,
reduce the amount chargeable to capital account for the
taxable year for such expenses by the amount of the excess.
Attach a statement to your tax return that lists the capitalized
expenses that were reduced. Identify the schedule or forms
for capitalized items on which the reductions were made.
If you make an election to claim a portion of your research
credit as a payroll tax credit, the amount elected is treated as
a research credit for purposes of the reduced credit.
Section B—Alternative Simplified
Credit (ASC)
Complete this section only if, instead of the regular credit:
1. You are electing the ASC, or
2. You previously elected the ASC and aren’t revoking the
election on this return.
Electing the ASC. You elect the ASC by completing
Section B and attaching the completed Form 6765 to your
timely filed (including extensions) original return for the tax
year the election applies. An ASC election can be made on
an amended return for a tax year only if you hadn’t previously
claimed the research credit on an original return or amended
return for that tax year. An extension of time to make the ASC
election will not be granted.
Line 29
Enter your qualified research expenses for the prior 3 tax
years. If the credit terminates during the tax year, prorate the
qualified research expenses for the prior 3 tax years for the
number of days the credit applied during the tax year.
Section C—Current Year Credit
Line 35
If the credit on line 17 or line 34 includes amounts paid to
employees as wages, and you are claiming a credit for
employer differential wage payments based on payments you
made to the same employees, enter on line 35 the portion of
the credit from Form 8932, line 2, that is attributable to wages
that were used to figure the credit on line 17 or line 34
(whichever applies).
See Form 8932, Credit for Employer Differential Wage
Payments, for more information on the credit.
Line 37
Enter total credit for increasing research activities from:
•
Schedule K-1 (Form 1065), Partner's Share of Income,
Deductions, Credits, etc., box 15 (code M);
•
Schedule K-1 (Form 1120S), Shareholder's Share of
Income, Deductions, Credits, etc., box 13 (code M); and
4
Instructions for Form 6765 (January 2024)