Federal & State Credit Calculations
Traditional Credit - ___ of the excess of QREs for the current tax year over a base period amount. The base period amount is the product of the taxpayer’s (1) fixed-base percentage, and (2) average annual gross receipts for the four tax years preceding the current year. The base period amount cannot be less than 50% of qualified research expense for the credit year
20%
What does the acronym CHRPS stand for?
Construction, Hospitality, Real Estate, Restaurants & Professional Services
Name the 4 stages of Pharmaceutical product development process:
Moss Adams was founded more than 100 years ago to specifically address the business and accounting needs of ___________ companies of the Pacific Northwest.
Forest Product
The year Moss Adams was founded
1913
Alternative Simplified Credit:
___ of the current year QREs that exceed 50% of the average qualified research expenses for the three preceding tax years
___ of the current year QREs if the taxpayer does not have QREs in each of the 3 preceding tax years
14% and 6%
Engineering discipline that deals with the design, construction, and maintenance of the physical and naturally built environment.
Civil Engineering
How do California's gross receipt rules differ from Federal and why does it impact our software clients?
Only include receipts of sales of tangible goods. Software/services are not included.
Farm Income
Name two MCP National Practices
A&D, Apparel, Automotive and Dealer Services, Manufacturing and Consumer Products, Retail, and Transportation and Logistics
The Payroll Tax Offset - Up to $250,000 is available to companies that have...
1) Gross receipts for five years or less.
2) Less than $5M in gross receipts in the credit year and for each subsequent year the credit is elected.
3) Qualifying research activities and expenditures.
Method of project delivery in which one entity provides both the design and construction services.
Design-Build
Within the Pharmaceutical audit techniques guide, this stage is deemed as low risk during which new treatments, compounds, targets, or candidates are discovered
Pre-Clinical/Discovery Research
Which court case tells us a taxpayer claiming supply QREs for process-related qualified research (i.e., when the business component is a process or technique rather than a product) need to be able to show a direct connection between the claimed supply costs and the qualified research activity, for example, that the supplies were purchased primarily for the qualified research activities or were in addition to the taxpayer’s normal commercial production requirements.
Union Carbide
Important to distinguish between Product vs Process
An original model of a potential new product or process that is used for research and testing purposes and specifically to resolve uncertainty concerning the new product or process or a component of a product or process (Treas. Reg. § 1.174-2(a)(4)).
What is a pilot model?
The Texas R&D Tax Credit rate is ___.
The credit generated by state taxpayers can offset ____________________.
5%
Texas Franchise Taxes
In Lake Mead, one of the primary water sources for Arizona and Nevada, the federal government is stepping in due to ongoing scarcity concerns. The government (owner) is building a dam to aid in ongoing drought measures. Client A is hired to lead the overall construction management of the project, while client B is hired to perform construction of the foundation. Name Client A and B’s role in the construction project.
A) General Contractor
B) Subcontractor
Name 3 examples of software testing
Unit Testing
Integration Testing
System Testing
Regression Testing
Alpha Testing
Beta Testing
Stress Testing
Performance Testing
Name all four national practices included within FBA
Name Moss Adam's three international practices
China
India
Latin America
When it is a short credit year, the base amount should be _______.
When it is a short base year, the gross receipts and QREs should be _________.
Prorated.
Annualized.
What does IRC §460(c) relate to?
Methods of accounting for long-term contracts.
Name the three additional qualifications included within the “High Threshold of Innovation Test” that must be considered when evaluating IUS.
At a high level what does Technical Advice Memorandum 9522001 say and why is it applicable within FBA? (Hint: "Taste")
Taste as used in 41(d)(3)(B) means individual or consumer preference not sensory taste. In the case of food products, new product development and improvements to existing products may relate to texture, smell and flavor. These characteristics affect taste in sensory context.
What is the R&D Four Part Test? Provide this in detail.
One person on the team states this immediately.
1. Permitted Purpose
The research is intended to develop a new or improved product or process, resulting in increased performance, reliability, quality, etc.
2. Technological in Nature
The research must rely on the hard sciences, such as engineering or physical, biological, chemical or computer science
3. Technical Uncertainty
The activity is undertaken to discover information that would eliminate uncertainty regarding the capability, method, or design of a new or improved product or process
4. Process of Experimentation
A process is designated to evaluate one or more alternatives for achieving the desired result. For example, this may be accomplished through modeling, simulation, or systematic trial and error