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SUPER RESEARCH & DEVELOPMENT TAX CREDIT

Eligible Businesses:
Businesses that qualify for the research expense credit and whose qualified research expenses conducted in Maine for the taxable year exceed 150% of the average research expenses for the three taxable years prior to September 1997.
 
 
Program Summary:
The credit is equal to the amount of qualified research expenses conducted in Maine for the taxable year that exceed 150% of the average research expenses for the three taxable years prior to September 1997. The credit is limited to 50% of the net tax due (tax due after the allowance of all other credits) and cannot reduce the taxpayer's tax due to less than the net tax due in the preceding taxable year. Any unused portion of the credit may be carried forward up to five years.
 
 
Program Example:
Big Company had qualifying research expenses of $5,000,000 in 1998. Average research expenses for the three taxable years prior to September 1997 were $1,000,000. The Maine net tax due for 1997 was $2,000,000. 50% of the 1998 net tax due is $1,500,000 before this credit. The credit amount is $3,500,000 ($5,000,000 - ($1,000,000 x 150%)). However, since the credit cannot reduce the tax liability of the taxpayer ($3,000,000) to less than the net tax liability of the preceding tax year ($2,000,000), the credit that may be taken in 1998 is $1,000,000 ($2,000,000 1997 net tax due - $3,000,000 1998 next tax due before the credit). The remaining unused credit ($2,500,000) may be carried forward up to five years.
   
Program Valuation Example:
 
 
Investment Assumptions
Qualifying Research Expenses (1998 Example)
$5,000,000
Average Research Expenses (3 Years Prior to 1997)
$1,000,000
Maine Net Tax Due (1997)
$2,000,000
Maine Net Tax Due (1998)
$3,000,000
ROI & Program Valuation
Credit Amount ($5,000,000 - ($1,000,000 * 150%))
$3,500,000
Credit Amount Eligible for (1998)
*Cannot Reduce taxes below 1997 levels*
$1,000,000
Amount of Credit Eligible for Carry-Forward
$2,500,000
Total Value of Research Expenses Tax Credit (Including Carry-Forward):
$3,500,000
 


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