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Research Credit CalculatorAlternative Simplified Credit (Section 41)

What do these figures come to once the work is shown?

The 14 percent alternative simplified credit, the 6 percent rate when a prior year has no QREs, and the reduced credit election.

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Your figures
Example figuresIllustrative only. Type over them with your own.
Research credit
$45,500
Alternative simplified credit
Credit before the reduced credit election
$45,500
Average QREs, prior 3 years
$350,000
Drawn to one scale
Research credit$45,500
Credit before the reduced credit election$45,500
Average QREs, prior 3 years$350,000
Deduction reduction if no election$45,500
All results
MeasureResult
Research credit$45,500
Credit before the reduced credit election$45,500
Method
14% of QREs over 50% of the 3-year average
Average QREs, prior 3 years$350,000
Deduction reduction if no election
Section 280C(c)(1)
$45,500
How this was worked out
Work shownrecomputed as you type
ASC = 14% x (current QREs - 50% x average QREs of the 3 prior years)
If any of the 3 prior years has no QREs: ASC = 6% x current QREs
Reduced credit election: credit x (1 - 21%)

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • ASC = 14% x (current QREs - 50% x average QREs of the 3 prior years)
  • If any of the 3 prior years has no QREs: ASC = 6% x current QREs
  • Reduced credit election: credit x (1 - 21%)

How it works

The alternative simplified credit under section 41(c)(4) is 14 percent of qualified research expenses above half of the average QREs of the three preceding years. If the taxpayer has no QREs in any one of those three years, the credit is 6 percent of current QREs.

Without an election, domestic research expenditures are reduced by the credit under section 280C(c)(1). A taxpayer can elect a reduced credit instead, cut by the credit times the highest corporate rate, and the election cannot be revoked. The ASC is an election of the taxpayer. This tool does not compute the regular credit or any credit limits.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

What are qualified research expenses?

Section 41(b) defines them. Enter the total you determined under that section.

Why is the credit smaller with the election?

You trade a smaller credit for keeping the full deduction, with the credit cut by the 21 percent corporate rate.

Can I get the credit with no QREs in a prior year?

Yes, at 6 percent of current QREs when any one of the three prior years has none.

Sources

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

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