United States

The RD Tax Credit – A Catalyst for Growth for Start-Ups and Midmarket Companies

Thursday February 25, 2016 3:30 PM - 5:00 PM EST
From KPMG TaxWatch

KPMG TaxWatch


Event Overview

The research credit has finally been made permanent, 34 years after its original, temporary enactment! On December 18, 2015, President Obama signed into law the Consolidated Appropriations Act, 2016 (the 2016 Act). The 2016 Act seamlessly reinstated the credit retroactively for qualified research expenses (QRE) paid or incurred on or after January 1, 2015.

The 2016 Act also reinstated the Eligible Small Business Credit (ESBC) for tax years beginning after 2015.  The ESBC applies to certain businesses (nonpublic corporations, S corporations, partnerships, or sole proprietorships) with average annual gross receipts of $50 million or less allowing them to offset their alternative minimum tax (AMT) liability with the credits.

Additionally, the 2016 Act also provides that for tax years beginning after 2015 certain start-up companies, defined as a “Qualified Small Business” (QSB), may elect to apply up to $250,000 of their research credit against their payroll tax liability instead of their income tax liability. The payroll tax offset, up to a maximum of $250,000,  is available to offset the employer’s portion of the payroll tax in the first two quarters  after the 2016 tax return is filed; therefore, this benefit starts in 2017 for a QSB.

Please join KPMG’s Research Credit Services professionals as they provide an overview of the research tax credit and best practices that small business and start-up companies can implement. Topics for discussion include:

  • Overview of the RD Tax Credit, qualifying activities, eligible qualified research expenses (QREs)  and credit calculation elections and methodologies
  • The AMT offset
  • The payroll tax liability offset

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Edward Jankun

Managing Director and Co-leader, Research Credit Services, KPMG LLP

Tyrone Montague

Managing Director, Research Credit Services, Washington National Tax, KPMG LLP

Joseph Hainly

Managing Director, KPMG LLP

Scott W. Vance

Principal, Private Markets Group, Washington National Tax, KPMG LLP

Matt Roberts

Senior Manager, Tax, KPMG LLP