(B) the acquiring taxable entity claims a credit under
this section for the corresponding period.
(3) If during any of the three tax periods following
the period in which a sale or other transfer described by paragraph
(2) of this subsection occurs, the taxable entity that sold or otherwise
transferred the controlling interest reimburses the acquiring taxable
entity for research activities conducted on behalf of the taxable
entity that made the sale or other transfer, the amount of the reimbursement
is:
(A) included as qualified research expenses incurred
by the taxable entity that made the sale or other transfer for the
tax period during which the reimbursement was paid, subject to paragraph
(5) of this subsection; and
(B) excluded from the qualified research expenses incurred
by the acquiring taxable entity for the tax period during which the
reimbursement was paid.
(4) An acquiring taxable entity may not include on
a report the amount of qualified research expenses otherwise authorized
by paragraph (1)(B) of this subsection if the taxable entity that
made the sale or other transfer described by paragraph (2) of this
subsection received an exemption under Tax Code, §151.3182 during
the portion of the period on which the acquiring taxable entity's
report is based that precedes the date of the acquisition.
(5) A taxable entity that makes a sale or other transfer
described by paragraph (2) of this subsection may not include on a
report the amount of reimbursement otherwise authorized by paragraph
(3)(A) of this subsection if the reimbursement is for research activities
that occurred during a tax period in which the entity that makes a
sale or other transfer received an exemption under Tax Code, §151.3182.
(g) Combined reporting. A credit under this section
for qualified research expenses incurred by a member of a combined
group must be claimed on the combined report for the group required
by Tax Code, §171.1014 (Combined Reporting; Affiliated Group
Engaged in Unitary Business). The combined group is the taxable entity
for purposes of this section.
(h) Tiered partnership reporting.
(1) An upper tier entity and a lower tier entity may
claim a credit under this section for qualified research expenses;
however, an upper tier entity and a lower tier entity cannot claim
a credit under this section for the same qualified research expense.
(2) An upper tier entity that includes the total revenue
of a lower tier entity for purposes of computing its taxable margin
as authorized by Tax Code, §171.1015 may claim the credit under
this section for qualified research expenses incurred by the lower
tier entity to the extent of the upper tier entity's ownership interest
in the lower tier entity.
(i) Limitation. The total credit claimed under this
section for a report, including the amount of any carryforward credit
under subsection (j) of this section, may not exceed 50% of the amount
of franchise tax due for the report before any other applicable tax
credits.
(j) Carryforward.
(1) If a taxable entity is eligible for a credit that
exceeds the limitation under subsection (i) of this section, the taxable
entity may carry the unused credit forward for not more than 20 consecutive
reports.
(2) Credits, including credit carryforwards, are considered
to be used in the following order:
(A) a credit carryforward of unused research and development
credits accrued under Tax Code, Chapter 171, Subchapter O, before
its repeal on January 1, 2008, and claimed as authorized by §3.593
of this title (relating to Margin: Franchise Tax Credits);
(B) a credit carryforward under this section; and
(C) a current year credit.
(k) Assignment prohibited. A taxable entity may not
convey, assign, or transfer the credit allowed under this section
to another entity unless all of the assets of the taxable entity are
conveyed, assigned, or transferred in the same transaction.
(l) Application for credit.
(1) A taxable entity must apply for a credit under
this section. A taxable entity applies for the credit by claiming
the credit on or with the franchise tax report for the period for
which the credit is claimed. To apply for a credit, a taxable entity
must also complete Form 05-178, Texas Franchise Tax Research and Development
Activities Credits Schedule, its electronic equivalent, or any form
promulgated by the comptroller that succeeds such form.
(2) The comptroller may require a taxable entity that
claims a credit under this section to provide all data and information
required for the comptroller to evaluate the credit and to comply
with Tax Code, §151.3182(c).
(m) Amending reports.
(1) If a report was originally due and filed after
the effective date of this section and a credit allowed under this
section was not claimed, a taxable entity may file an amended report
within the statute of limitation to claim a credit, if the taxable
entity or a member of its combined group does not have an active Registration
Number for that period. See §3.584 of this title for information
about filing an amended report.
(2) If a taxable entity or member of the combined group
has or had a Registration Number for a period it intends to claim
a credit allowed under this section, the taxable entity or member
of the combined group must submit a written request to cancel the
registration before claiming a credit with the following information:
(A) the tax period(s) covered by the report which it
intends to claim a credit allowed under this section; and
(B) a statement whether tax-exempt purchases were made.
If tax-exempt purchases were made, include an original or amended
sales and use tax report with tax due, penalty, and interest for the
sales tax periods that cover the tax-exempt purchases.
(3) If a report was filed claiming a credit allowed
under this section and the taxable entity later decides to claim a
sales and use tax exemption under Tax Code §151.3182, the taxable
entity must:
(A) file an amended report that does not claim the
credit under this section and pay any tax, penalty, and interest due;
(B) apply for a Registration Number; and
(C) file a request for a sales and use tax refund for
taxes paid on purchases under Tax Code, §151.3182.
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