Corporate Income Tax Research and Development Credit
Instructions

Allocation for Research and Development Tax Credit for Florida Corporate Income/Franchise Tax

(R. 01/18, Rule 12C‑1.051, Florida Administrative Code, Effective 01/18)

The deadline to apply for the 2020 allocation of credit has passed and the Department is no longer accepting applications for expenses incurred in calendar year 2019. The application process for an allocation of credit related to expenses incurred in the 2020 calendar year will open on March 20, 2021.

Reference: Section 220.196, Florida Statutes.


Instructions

Once you complete this application, you will receive a confirmation number. The screen will display the information entered and confirm receipt of the electronic application for credit allocation. You will be able to print this information and confirmation number.

The Department will send you written correspondence either approving an allocation of tax credit or explaining why a credit allocation could not be approved.

About the Research and Development Tax Credit

The credit is available annually and is based upon qualified research expenses in Florida allowed under section section (s.) 41 of the Internal Revenue Code (IRC). Approved tax credits will be based on qualified research expenses incurred during the prior calendar year.

Who May Apply

Corporations, as defined in s. 220.03, F.S., that also meet the definition of qualified target industry business, as defined in s. 288.106(2)(n), F.S., may apply. However, only qualified target industry businesses in the manufacturing, life sciences, information technology, aviation and aerospace, homeland security and defense, cloud information technology, marine sciences, materials science, and nanotechnology industries may qualify for a tax credit.

Businesses that are partnerships, limited liability companies taxed as partnerships, or disregarded single member limited liability companies, are not corporations under Section 220.03, F.S., and, therefore, may not apply for an allocation of credit. However, each corporate partner of a partnership may apply separately for an allocation of credit based on the corporation’s separate research expenses, including allocated partnership research expenses, if the corporate partner is also a qualified target industry business. For disregarded entities, the corporation that owns the single member limited liability company may apply separately for an allocation of credit based on the corporation’s separate research expenses, including those of the disregarded single member limited liability company, if the corporate owner is also a qualified target industry business. For purposes of 26 U.S.C. s. 41, the research expenses are apportioned among the partners during the taxable year and are treated as paid or incurred directly by the partners rather than by the partnership.

A corporation applying for the tax credit must include a letter from the Department of Economic Opportunity certifying that it is an eligible qualified target industry business with its application, or documentation that it has timely protested the Department of Economic Opportunity’s determination not to issue such a certification letter.

Federal Income Tax Credit

To receive a Florida research and development tax credit, the corporation must claim and be allowed a research credit for the taxable year against federal income tax for qualified research expenses under s. 41, IRC. Attach federal Form 6765 (Credit for Increasing Research Activities) and federal Form 3800 (General Business Credit) to Florida Form F‑1120 (Florida Corporate Income Tax Return) when claiming the Florida credit. For federal forms, see www.irs.gov/Forms-&-Pubs.

Qualified Research Expenses

Qualified research expenses are defined as research expenses qualifying for the credit under s. 41, IRC, for in‑house research expenses incurred in Florida or contract research expenses incurred in Florida. The term "qualified research expenses" does not include research conducted outside Florida or research expenses that do not qualify for a credit under s. 41, IRC.

Program Limitations

If the total credits requested (computed as the sum of the credit allocations requested from Form F‑1196 for all qualified applicants) exceed the annual credit cap, each qualified applicant will be allocated credit on a prorated basis.

The Florida research and development tax credit taken may not exceed 50 percent of the Florida corporate income tax liability after all other credits have been applied in the order provided in s. 220.02(8), F.S.

If the amount of qualified research expenses is reduced as a result of a federal audit or examination, the Florida credit must be recalculated. Amended Florida returns must be filed for all affected years, and the difference between the initial credit amount taken and the recalculated credit amount, with interest, in accordance with the provisions of s. 220.807, F.S., must be paid to the Department.

Should the amount of credit requested be overstated, the percentage of the original allocation provided by the Department will be applied to the lesser amount of credit that should have been requested.

Additional Information

See Rule 12C-1.0196, F.A.C., for additional information on the Research and Development Tax Credit.

Apply for the Research and Development Tax Credit Allocation