Research and Development Credit
INCOME TAXPAYER-Effective for all taxable years beginning after December 31, 1987.
The Kansas research and development credit allows a taxpayer who makes expenditures in research and development activities in Kansas to claim an income tax credit.
QUALIFICATIONS
Expenditures made for research and development purposes must be
allowable under the provisions of the federal internal revenue code
of 1986.
The Internal Revenue Code defines qualified research expenditures as those expenses for activities intended to discover information that eliminates uncertainty concerning the development or improvement of a product. Product is a process, technique, formula or invention.
Several types of expenditures are not allowed:
- acquisition of another's patent, model, or production;
- advertising;
- consumer surveys;
- efficiency surveys;
- historical or literary research;
- management studies;
- ordinary testing for quality control;
- research conducted after commercial production begins;
- research related to style taste, cosmetic, or seasonal design factors;
- research related to the adaptation of an existing business component to a particular customer's requirement;
- research conducted outside of the United States;
- any research in the social sciences, arts or humanities;
- research funded by any grant, contract or government; and
- routine data collection.
CREDIT AMOUNT
The credit is 6.5% of the difference between the actual qualified
research and development expenses for the year and the average of
the actual expenditures made during the year and the two previous
tax years.
LIMITATION OF CREDIT
The credit allowed in any one tax year is limited to 25% of the
credit plus any carry forward. Any remaining unused credit may be
carried forward in 25% increments until the total amount of credit
is used.
PROCEDURES TO CLAIM THE CREDIT
You may download Schedule K-53
to claim the research and development credit. This schedule must
be completed and submitted with the income tax return. You may also
call the Department of Revenue voice mail system at (785) 296-4937
to request Schedule K-53. You will be asked to give your name, address,
phone number and form(s) you desire. Please allow two weeks for
delivery of your forms.