Section 280-RICR-20-20-2.3 - Calculation of the CreditA. The credit is based on the amount of the taxpayer's Federal excess expenses and is calculated by first determining what of the taxpayer's Federal excess expenses were incurred in Rhode Island after July 1, 1994 and then multiplying that amount by the 5% rate to yield the Rhode Island credit. For periods January 1, 1998 and thereafter, the credit is 22.5% on the expenses up to $111,111 and 16.9% for the remaining expenses over $111,111.B. EXAMPLES 2. Taxpayer A has completed and claimed its Federal Section 41 credit and has qualified research expenses for its Federal credit of $100,000; its Federal Section 41 base amount is $75,000; all expenses were incurred in Rhode Island and were incurred evenly throughout 1995 and A has a calendar year end. Taxpayer A's 1995 RI R & D expense credit is calculated as: Federal Qualified Research Expenses | $100,000 |
Federal Base Amount | 75,000 |
Federal Excess Expenses | 25,000 |
Amount of Federal Excess Expenses in RI | 25,000 |
Amount of Expenses in RI after 7/1/94 | 25,000 |
Credit @ 5% | $1,250 |
2. Taxpayer B has a similar fact pattern to Taxpayer A above, except that Taxpayer B has a March 31 year end. Taxpayer B's FYE 3/31/95 RI R & D expense credit is calculated as: Federal Excess Expenses | $25,000 |
Amount of Federal Excess Expenses in RI | 25,000 |
Amount of Expenses in RI after 7/1/94 (9 mos.) | 18,750 |
Credit @ 5% | $938 |
3. Taxpayer C has a similar fact pattern to Taxpayer A above except that the excess federal expenses were specifically identified as $9,000 in August in Connecticut and $16,000 in October in Rhode Island. Taxpayer C's calendar year 1995 RI R & D expense credit is calculated as: Federal Excess Expenses | $25,000 |
Amount of Federal Excess Expenses in RI | 16,000 |
Amount of Expenses in RI after 7/1/94 (Specific) | 16,000 |
Credit @ 5% | $800 |
4. Taxpayer D has a similar fact pattern to Taxpayer B above except that the excess federal expenses were specifically identified as $9,000 in August in Connecticut, $7,000 in May 1994 and $9,000 in October in Rhode Island. Taxpayer C's f/y/e 3/31/95 RI R & D expense credit is calculated as: Federal Excess Expenses | $25,000 |
Amount of Federal Excess Expenses in RI | 16,000 |
Amount of Expenses in RI after 7/1/94 Specific | 9,000 |
Credit @ 5% | $450 |
5. Taxpayer E has $135,000 of qualified expenses in tax year 2000. The credit is calculated at 22.5% of the first $111,111 and 16.9% of the remaining expenses over $111,111. The credit is $29,037 [$111,111 @ .225% or $25,000] plus $4,037 [16.9% of the remaining $23,889].280 R.I. Code R. § 280-RICR-20-20-2.3