Minnesota Credit for Increasing Research Activities RD

Credit for Increasing Research Activities RD
2023 RD, Credit for Increasing Research Activities
*237011*

2023 RD, Credit for Increasing Research Activities
Unitary businesses: Complete	a	separate	Schedule	RD	for	each	corporation	that	is	claiming	the	credit.
Name of Corporation

FEIN

Minnesota Tax ID

Round amounts to nearest whole dollar.
1	 Wages	for	qualified	services	(do not include wages used in
figuring	the	work	opportunity	credit)	 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 Cost of supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3	 Amounts	paid	or	incurred	for	the	right	to	use	computers	to	conduct	research	 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4	 Applicable	percentage	of	contract	expenses	 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5	 Amount	paid	to	qualified	research	organizations	for	basic	research	 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6	 Development	contributions	to	a	nonprofit	organization	 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7	 Total	qualified	research	expenses	in	Minnesota	for	the	tax	year	(add	lines	1	through	6) . . . . . . . . . . . . . . . . . . . 7
A- Minnesota Sales
and Receipts

8	 Tax	year	1988. . . . . . . . . . . . . . . . . . . . .

8

9	 Tax	year	1987. . . . . . . . . . . . . . . . . . . . .

9

10	 Tax	year	1986	 . . . . . . . . . . . . . . . . . . . .

10

11	 Tax	year	1985	 . . . . . . . . . . . . . . . . . . . .

11

12	 Tax	year	1984	 . . . . . . . . . . . . . . . . . . . .

12

13	 Add	lines	8	through	12 . . . . . . . . . . . . .

13

B- Minnesota Qualified
Research Expenses

14	 Fixed	base	percentage	(divide	line	13B	by	line	13A;	do	not	fill	in	more	than	16%	[.16]).
Start-up	companies,	see	instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
15 Tax	year	2022. . . . . . . . . . . . . . . . . . . . . . . 15
16 Tax	year	2021. . . . . . . . . . . . . . . . . . . . .

16

17	 Tax	year	2020. . . . . . . . . . . . . . . . . . . . .

17

18	 Tax	year	2019. . . . . . . . . . . . . . . . . . . . .

18

19	 Add	lines	15	through	18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
20	 Average	annual	gross	receipts	(multiply	line	19	by	25%	[.25]) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
21	 Multiply	line	20	by	the	percentage	on	line	14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
22	 Multiply	line	7	by	50%	(.50) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

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2023 Schedule RD, page 2
*237021*
Name of Corporation

FEIN

Minnesota Tax ID

Round amounts to nearest whole dollar.

23	 Base	amount	(enter	amount	from	line	21	or	line	22,	whichever	is	greater). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
24 Subtract	line	23	from	line	7	(if	result	is	zero	or	less,	leave	blank) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
25	 Enter	the	amount	from	line	24	or	$2,000,000,	whichever	is	less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
26	 Subtract	line	25	from	line	24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
27	 Multiply	line	25	by	10%	(.10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
28	 Multiply	line	26	by	4%	(.04) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
29

Current credit (add	lines	27	and	28) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

30	 Your	share	of	any	credit	from	a	partnership	(see	instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
31	 Tentative	credit	(add	lines	29	and	30;	see	instructions). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
32	 Limitation	(see	instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
33 Credit	for	increasing	research	activities	(enter	line	31	or	line	32,	whichever	is	less) . . . . . . . . . . . . . . . . . . . . . . . . 33
34 Total	credit	allocated	to	other	members	of	the	combined	return	(see	instructions) . . . . . . . . . . . . . . . . . . . . . . 34
35 Add	lines	33	and	34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
36 Subtract	line	35	from	line	31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
37 Current	year	credit	from	other	members	of	the	combined	return	(see	instructions) . . . . . . . . . . . . . . . . . . . . . . 37
38 Add	lines	33	and	37 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
39 Your	credit	carryover	from	2022	(see	instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
40 Add	lines	38	and	39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
41 Total	carryover	credit	received	from	other	members	of	the	combined	return	(see	instructions) . . . . . . . . . . . . 41
42	 Total	carryover	credit	allocated	to	other	members	of	the	combined	return	(see	instructions) . . . . . . . . . . . . . . 42
43 This	line	intentionally	left	blank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
44	 This	line	intentionally	left	blank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
45 2023 Credit (enter	line	32	or	the	sum	of	lines	40	and	41,	whichever	is	less) Enter on Form M4T line 18. . . . . . 45
46

Credit carryover to 2024 (see	instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Attach this schedule and a copy of federal Form 6765 to your Minnesota return.

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2023 Schedule RD, page 3
*237051*
Name of Corporation

FEIN

Minnesota Tax ID

Additional Information. Please check the appropriate box.
1. Did a CPA, attorney, consultant or other:

Yes

a.	 Assist	in	the	calculation	or	preparation	of	the	tax	credit?	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1a

b.	 Conduct	a	R&D	tax	credit	study? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1b

If	“Yes”	is	checked	on	lines	1a	or	1b,	provide	the	following	information	for	each	individual	who	assisted	in	the	calculation	or	preparation	
of	the	tax	credit	or	conducted	a	tax	credit	study.	(If	more	than	one	individual,	attach	a	schedule	for	each	with	the	following	information):
Individual’s	Name	

Individual’s	Title

Individual’s	Company	

Individual’s	Phone	Number

c.	 If	“Yes”	is	checked	on	lines	1a	or	1b,	may	the	Minnesota	Department	of	Revenue	discuss	the	tax	credit	with	the	
	
individual(s)	who	assisted	in	the	calculation	or	preparation	of	the	tax	credit	or	conducted	a	tax	credit	study? . . . . . .
2.

Review of
contemporaneous
records

How were the following calculated: check appropriate box.
a. Wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2a

b. Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2b

c.	 Contracted	Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2c

Estimation

Combination of review of
contemporaneous
records and estimation

3.	 Were	the	following	performed/conducted	within	the	state	of	Minnesota:
a. Wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1c

3a

b.	 Contracted	Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3b
If “No” is checked on lines 3a or 3b, the taxpayer cannot claim those expenses in calculating the tax credit.
4.	 Was	the	claimed	research	performed	at	the	request	of	another	individual	or	entity? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.	 Was	the	claimed	research	performed	as	part	of	a	joint	venture	with	another	individual	or	entity? . . . . . . . . . . . . . . . . . . . .

5

6.
	

6

Did	you	receive	an	Innovation	Grant	from	the	Minnesota	Department	of	Employment	
and	Economic	Development	(DEED)? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
If “Yes” is checked, see instructions for lines 1-6 Qualified Expenses.

9995

No

2023 Schedule RD Instructions
If	your	business	paid	qualified	research	and	development	expenses	in	Minnesota,	and	those	expenses	exceed	a	base	
amount,	you	may	be	entitled	to	this	credit.
The credit equals 10 percent of the first $2,000,000 of qualifying expenses over the base amount, and 4 percent of expenses over $2,000,000.
Partnerships and S corporations are allowed to pass the credit through to their partners and shareholders.

Qualified Expenses

Round amounts to the nearest whole dollar.

Lines 1–6

Qualified research expenses are the same kinds of expenses and payments that qualify for the federal credit for increasing research activities
except that they must be for research done in Minnesota. Include your qualified Minnesota research expenses paid or incurred in the taxable
year on lines 1 through 5.
Qualified research expenses also include contributions to qualified nonprofit organizations that are operated to make grants to small, technologically innovative enterprises in Minnesota during their early development stages. Include these contributions on line 6.
If you received an Innovation Grant from the Minnesota Department of Employment and Economic Development (DEED), then any expenditures funded by the Innovation Grant are not eligible qualified expenses. Do not include these funded expenditures on lines 1 through 6.

Base Amount

Lines 8–12 and 15–18

The base amount is calculated in the same way as it is under federal law, except that expenses must be for research done in Minnesota. Also,
your Minnesota sales or receipts that you used to apportion income are used instead of your gross receipts to calculate the base amount.
Enter your Minnesota sales and receipts and qualified research expenses for the indicated tax years in the appropriate columns.

Lines 13 and 14
Fixed-Base Percentage

Follow the instructions on lines 13 and 14 to determine the amount of your fixed-base percentage. (Note: Only tax years beginning in 1984
through 1988 are used to calculate the percentage.)
Start-up companies. If you had Minnesota sales or receipts and Minnesota qualified research expenses in fewer than three tax years beginning after Dec. 31, 1983, and before Jan. 1, 1989, or if the first taxable year you had both gross receipts and qualified research expenses began
after Dec. 31, 1983, your fixed-base percentage for the first five tax years beginning after 1993 is 3 percent (line 14).
See IRC section 41(c)(3)(B)(ii) to figure the fixed-base percentage for any tax year after the fifth tax year beginning after 1993 for which you
have qualified research expenses. Use Minnesota qualified research expenses and sales or receipts in applying the provisions of IRC section
41(c)(3)(B)(ii).

Line 30
Any Credit from a Partnership

Include any credit amounts you received as a partner of a partnership (from line 27 of Schedule KPC). Credits from a partnership are limited
to the amount of tax attributable to your share of the partnership’s taxable income.
Attach a statement explaining amounts included on line 30.

Line 31
Tentative Credit

C corporations: Complete lines 31 through 44.
Partnerships: For your individual, estate and trust partners, pass the amount, pro rata, on Schedule KPI, line 24. For your partnership and
corporate partners, pass the amount, pro rata, on Schedule KPC, line 27. However, partners electing to file composite returns are not entitled
to this credit.
Attach Schedule RD when you file your Form M3.
S corporations: Pass the amount through, pro rata, to shareholders on Schedule KS, line 24. However, shareholders electing to file composite
returns are not entitled to this credit.
Attach Schedule RD when you file your Form M8.

Line 32
Limitation

Your credit is limited to the regular franchise tax or the liability for tax, whichever is less. Enter the lesser of Form M4T, line 10, or the difference of Form M4T, line 17 minus the sum of lines 22 through 25. If the result is zero or less, leave blank.
Continued

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2023 Schedule RD Instructions (Continued)
Line 34
Unitary Businesses

If the 2023 credit on line 31 exceeds the limitation on line 32, the excess must be entered on Form M4T line 15 in the columns of other members of the unitary business that didn’t generate the credit. Credits claimed by other members are limited to the regular franchise tax or the
liability for tax, whichever is less, as described in the instruction for line 32 above. Enter the total amount of credit claimed by other members
of the unitary group on line 34. The amount on line 34 may not exceed the difference of line 31 minus line 32. Attach a schedule showing the
calculation of current year credits claimed by other members.

Line 37

If a member of your unitary group that is included on the combined return has a credit in excess of its limitation, that excess must be utilized
by other members if possible. Enter any amount received from another member or members on line 37. Provide a schedule identifying the
name and Minnesota identification number of the member(s) which generated the credit. The amount on line 37 may not exceed the difference of line 32 minus line 33.

Line 39

Credits from prior years included on this line may only be from the corporation completing this schedule. You may not include credits earned
by other members of the unitary group on line 39.

Line 41
Carryover Credit Received from Other Members

If a member of the unitary group has a carryover credit in excess of its limitation, that excess must be utilized by other members if possible.
Enter the amount of carryover credit received from another member or members on line 41. The amount on line 41 may not exceed the difference of line 32 minus line 40 (if zero or less, enter 0). Attach a schedule identifying the name and Minnesota identification number of the
member(s) which generated the credit.

Line 42
Carryover Credit Allocated to Other Members

If line 40 exceeds line 32, the excess must be utilized by other members if possible. Enter the excess on Form M4T line 15 in the columns of
other members of the unitary group that did not generate the credit. Credits allocated to other members are limited to the regular franchise tax
or the liability for tax for each member, whichever is less, as described in the instruction for line 32 above. Enter the total amount of carryover credit allocated to other members of the unitary group on line 42. The amount on line 42 may not exceed the difference of line 40 minus
line 32 (if zero or less, enter 0). Attach a schedule showing the calculation of carryover credits allocated to other members.

Line 46

Any credit remaining after being applied to other members must be carried forward by the earning member that generated the credit. The
credit can be carried forward by that member for 15 years.
If line 31 is more than line 32, subtract line 42 from the sum of lines 36 and 39, and enter the result on line 46 (if zero or less, enter 0). If line
31 is less than or equal to line 32, subtract the sum of lines 42 and 45 from line 40, and enter the result on line 46 (if zero or less, enter 0).

Additional Information

Completely fill out the information requested in order to assist in calculating credit for increased research activity you may be qualified to
claim and aid in processing your return.

Information and Assistance
Website: www.revenue.state.mn.us
Email:

[email protected]

Phone:

651-556-3075

This material is available in alternate formats.

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