Sec 48D Qualifying Therapeutic Discovery Project Credit Webcast
Question and Answer Session - May 27, 2010
Question: Our company is developing three technologies which meet all the requisite criteria. Do we complete the application for the company or for technologies?
Answer: The applications are by "project." In this case, each separate technology (neither the company, nor each separate indication on a single technology) would be the subject of a separate application.
Question: May we include direct employee expenses incurred by R&D employees (i.e. Travel, Hotel and Meals)?
Answer: If it is necessary for and directly related to the conduct of the qualifying therapeutic discovery project, the expenses should be included.
Question: If the company’s therapeutic research is funded by government grants or contracts do you still qualify?
Answer: The credit is based on the qualified investment costs, not the nature of the income or funding of the research. The Notice states that the qualified investment should be reduced by the amount of any grant excluded from gross income. To the extent that the government or other agency grant has been included in income, we believe the company would not be precluded from claiming a credit. However, if the grant is excluded from gross income (i.e. netted against expenses), the company is not eligible for the credit for qualified investments that are funded by that grant.
Question: For a fiscal year company with a year-end of Oct 31, how does this impact the reporting of the qualified investment for the QTDP?
Answer: Sec. 48D applies to amounts paid or incurred after Dec. 31, 2008 for taxable years beginning after that date. In this situation, the taxpayer would look at costs for tax years beginning on Nov. 1, 2009 and Nov. 1, 2010. Taxpayers are permitted to project their costs for these purposes. However, if a grant is requested, the company would not be entitled to receive it until 30 days after the tax year has ended.
Question: When we receive a cash grant, are we free to spend the money how we choose, or are there restrictions?
Answer: There are no restrictions provided for in Notice 2010-45. The grant is for expenses that have already been incurred as a "reimbursement," so no restriction is anticipated.
Question: Why does the IRS require a DUNS number to apply for a grant?
Answer: The DUNS number is required in order to register with the CCR, as is required under the grant option.
Question: Can we download an official form?
Answer: While it is not currently available, Form 8942 will be available on or before June 21.
Question: Are you available to review the application before it is submitted?
Answer: RSM would welcome the opportunity to assist in any way you would request. That would include both review and/or assistance with completion of the Application or Project Information Memorandum.