1. Research Tax Credit: The Basics Michael A. Krajcer, JD, CPA Tax Credits Group, LLC Office: (440) 331-0714 Mobile: (216) 308-1564

2.  Benefit: ◦ Federal Income Tax credit equal to 14% of the R&D expenditures that exceed a base amount. ◦ State Credit – depends which state the activity takes place in.  Ohio – credit equals 7% of the qualifying expenditures that exceed a base amount  Applied against the CAT tax 2

3.  Qualifying Activity – Research and development intended to create a new or improved: Product Process Computer Software Invention Technique Formula  Qualifying Costs: Wages Supplies Contract Research (at 65%) 3

4.  Requirements: Document the project met the “Four-part Test”: 1)R&D was for a Permitted Purpose 2)Developmental Uncertainty existed at the outset of the project 3)The R&D utilized a Process of Experimentation 4)The experimentation relied on Technical Information 4