Md. Code Regs. 24.05.12.09

Current through Register Vol. 51, No. 24, December 2, 2024

Section 24.05.12.09 - Determining Whether Research or Development is Conducted in the State

A. All the cellulosic ethanol technology research or development activities conducted, performed, or carried on by or on behalf of the business entity for which the business entity applies for a credit must have been performed, conducted, or carried on in the State.

B. If the business entity contracts or makes arrangements of any kind, however styled, for the performance, conduct, or carrying on of cellulosic ethanol technology research and development activities on behalf of the business entity by third parties, the person or firm performing, conducting, or carrying on cellulosic ethanol technology research or development activities for or on behalf of the business entity and for which the business entity applies for a credit must have performed, conducted, or carried on all of those cellulosic ethanol technology research or development activities in the State.

C. All supplies used in the cellulosic ethanol technology research and development activities for or on behalf of the business entity for which the business entity applies for a credit must have been consumed in the State.

D. Business entities making application for a tax credit shall maintain accounting books, records, and systems that account for cellulosic ethanol technology research and development activities and Maryland qualified research and development expenses in accordance with:

(1) Federal and State income tax laws and regulations; and

(2) Generally accepted accounting principles.

E. The Department shall apply a facts and circumstances analysis to determine whether a business entity has conducted, performed, or carried on in the State all the cellulosic ethanol technology research and development activities for which the business entity applies for a credit. The Department's determination will be based in substantial part on the statements and documents of the business entity contained in or appended to its application submitted in accordance with Regulation .07 of this chapter.

F. For purposes of determining eligibility for certification of tax credits, the Department shall consider the following factors:

(1) The locations where the cellulosic ethanol technology research or development activities are performed by or on behalf of the business entity;

(2) The nature of the business entity's interest in and control over the buildings, fixtures, and equipment used in performing or conducting the cellulosic ethanol technology research or development activities;

(3) The identity, residence or business location, qualifications, relevant experience, demonstrated expertise, and legal and business relationship to the business entity of any third party persons or firms performing any cellulosic ethanol technology research or development activities or services on behalf of the business entity;

(4) The nature and quantities of supplies obtained for use or used in cellulosic ethanol technology research or development activities performed or conducted by or on behalf of the business entity at each location, the sources of these supplies, whether the supplies are in fact consumed in cellulosic ethanol technology research or development activities by or on behalf of the business entity, and the locations where the supplies are consumed in cellulosic ethanol technology research or development activities by or on behalf of the business entity;

(5) The business entity's methods and policies for accounting for the cellulosic ethanol technology research and development activities;

(6) The scientific, environmental, and engineering merits of the business entity's Maryland qualified research and development paradigms, activities, manufacturing methods and processes, and products; and

(7) Any other factors that the Department determines are relevant for the determination.

Md. Code Regs. 24.05.12.09