- Franchise Tax Board (FTB) – California agency administering personal and corporate income taxes.
- Revenue and Taxation Code (R&TC) §17052.12 – California law authorizing research credit for individuals.
- Revenue and Taxation Code (R&TC) §23609 – California law authorizing research credit for corporations.
- Qualified Research Expenses (QREs) – Expenses eligible for the California research tax credit.
- California Qualified Research – Research activities specifically performed within California state.
- Research Activities Conducted Within California – Research work physically taking place inside California.
- Fixed-Base Percentage – Ratio of historical research expenses to gross receipts.
- Base Amount – Benchmark calculation determining credit eligibility threshold.
- Average Annual Gross Receipts (for Base Amount) – Four-year average of receipts prior to credit year.
- California Gross Receipts Definition – Income specifically derived from California sources.
- Gross Receipts from California Sales – Revenue generated from sales within California.
- Alternative Incremental Credit (AIC) – Optional calculation method with tiered credit rates.
- AIC Base Amount – Specific base calculation for Alternative Incremental Credit.
- Election of AIC Method – Formal choice to use AIC calculation method.
- Revocation of AIC Election (FTB Consent) – Canceling AIC method requires Franchise Tax Board approval.
- Alternative Simplified Credit (ASC) – Simplified method using recent QRE averages.
- ASC Method for California (SB 711) – Specific CA simplified credit legislation proposals.
- ASC Credit Rate (3%) – Rate applied if this specific method is elected.
- Basic Research Payments – Payments to qualified orgs for scientific research.
- Basic Research Credit Rate (24%) – Percentage rate for basic research payment credits.
- Qualified Organization (for Basic Research) – Universities or scientific bodies receiving research payments.
- Nonrefundable Credit – Credit cannot exceed tax liability; no cash back.
- Indefinite Carryover/Carryforward – Unused credits carried forward to future years indefinitely.
- Credit Carryback (Not Allowed) – Cannot apply current credits to prior tax years.
- Reduced Credit Election (IRC §280C(c)) – Election to reduce credit, preserving wage deductions.
- Credit Limitations ($5,000,000) – Cap on total credit usage for specific taxpayers.
- Refundable Credit Election (Credit Cap Disallowed) – CA generally does not allow refundable research credits.
- Five-Year Refundable Period – Timeframe rules for specific refundable credit exceptions.
- Minimum Franchise Tax ($800) – Minimum annual tax for CA corporations and LLCs.
- Tax Below Tentative Minimum Tax (TMT) – Credit cannot reduce tax below alternative minimum.
- Corporate Income Tax (Rate 8.84%) – Standard tax rate for C corporations in California.
- S Corporation Tax Rate (1.5%) – Reduced tax rate applied to S Corporations.
- S Corporation Entity-Level Credit (1/3 Rule) – Limit on credit usage by S Corp entity.
- S Corporation Pass-Through (100%) – Full credit amount passes to shareholders.
- Partnership Allocation – Distributing credits among partners based on ownership.
- Disregarded Business Entity (SMLLC) – Single-member LLC treated as owner for tax.
- Sole Proprietorship Eligibility – Individual owners can claim credit on personal returns.
- Form FTB 3523 (Research Credit) – California form for calculating research tax credits.
- Election to Assign Credit – Choosing to transfer credit to eligible affiliates.
- Eligible Credit (for Assignment) – Portion of credit allowed to be assigned.
- Eligible Assignee – Affiliated corporation qualified to receive assigned credit.
- Form FTB 3544 (Assignment of Credit) – Form used to assign credit between corporations.
- Combined Reporting Group – Affiliated companies filing a single unitary return.
- Joint and Several Liability (Assignment) – Both parties responsible for tax relating to assignment.
- Qualified Services (Wages) – Employee wages for engaging in qualified research.
- Qualified Supplies – Tangible items consumed during research process.
- Rental or Lease Costs of Computers – Payments for cloud or computer time for research.
- Contract Research Expenses Percentage (65%) – Portion of contractor payments eligible for credit.
- Internal Revenue Code (IRC) Section 41 Conformity – CA adherence to federal research tax laws.
- Process of Experimentation (4-Part Test) – Testing alternatives to eliminate technical uncertainty.
