Massachusetts recently adopted a corporate excise credit for certain research expenses. See G.L. c. 63, § 38M, as added by St. 1991, c. 176, § 6. The credit applies to all eligible research expenses incurred on or after January 1, 1991. Research expenses are incurred on or after January 1, 1991, if the expenses are treated as having been incurred on or after that date for federal income tax purposes. The purpose of this Technical Information Release (TIR) is to explain how corporations with eligible research expenses incurred on or after January 1, 1991, can claim the credit on their corporate excise returns for taxable years beginning during calendar year 1990 and ending during calendar year 1991. This TIR applies only to the corporate excise imposed under Chapter 63 of the General Laws.

A. Corporations That Have Already Filed 1990 Returns

Corporations that filed their 1990 Massachusetts corporate excise returns without claiming the credit may claim the credit by filing amended returns and entering the amount of the credit, as determined under Emergency Regulation 830 CMR 63.38M.1, on Item 9 (Item 11 for S Corporations) of the Computation of Excise section of the return. Such corporations should indicate clearly in the blank space on Item 9 (or Item 11 if applicable) that they are claiming the research credit and not the vanpool credit, which is normally claimed using that Item. A corporation claiming both the research and vanpool credits should use Item 9 (or Item 11 if applicable) for both and separately state the amount of each credit. In addition, to claim the research credit corporations must attach the following items to their amended returns:

1. A completed Schedule RC, Research Credit, (or, if appropriate, Schedule RC-A, Research Credit-Aggregation) must be submitted to substantiate the computation of the credit. The Department did not issue a 1990 Schedule RC (or Schedule RC-A), so corporations should use the 1991 Schedule RC (or Schedule RC-A) to claim the credit for taxable years beginning during 1990 and ending during 1991.

2. A completed application for abatement (Form CA-6) must be filed to claim any refund attributable to the credit.
Corporations that filed their 1990 corporate excise returns and claimed the credit must recompute the credit in the manner required by Emergency Regulation 830 CMR 63.38M.1. Regardless of whether the amount of the credit, so computed, differs from the amount of the credit claimed, such corporations must file amended returns and attach Schedule RC (or Schedule RC-A) in the manner provided above.

B. Corporations That Have Not Filed 1990 Returns

Corporations that have not already filed their 1990 corporate excise returns may claim the credit by entering the amount of the credit, as determined under Emergency Regulation 830 CMR 63.38M.1, on Item 9 (or Item 11 if applicable) of the Computation of Excise section of the return, in the manner described above. Such corporations must attach a completed Schedule RC (or Schedule RC-A), using the 1991 form as provided above.

For information regarding the computation of the Massachusetts research credit see Emergency Regulation 830 CMR 63.38M.1. Taxpayers with questions about the computation of the credit or the manner in which it can be claimed should call the Department's Taxpayer Assistance Bureau at (617) 727-4271.

Mitchell Adams
Commissioner of Revenue

November 25, 1991

TIR 91-8