| Research Expense Tax Credit (REC) |
A state tax incentive rewarding Indiana businesses for increasing investments in qualified research and development. |
| Indiana Code § 6-3.1-4 |
The specific section of Indiana state law governing the requirements and administration of research credits. |
| Indiana Code § 6-3.1-4-1 (Definitions) |
Legal definitions for terms including base amount, pass-through entities, and Indiana qualified research expenses. |
| Indiana Code § 6-3.1-4-2 (Amount of Credit; Computation) |
Statutory guidelines detailing how to calculate the total research tax credit available to eligible taxpayers. |
| Indiana Code § 6-3.1-4-2.5 (Alternative Computation for Aerospace) |
A specialized calculation method available specifically for aerospace contractors performing qualified research within Indiana borders. |
| Indiana Qualified Research Expense (IQRE) |
Qualified research expenses incurred specifically for research activities physically conducted within the state of Indiana. |
| Qualified Research Expense (QRE) |
Expenditures including wages, supplies, and contract costs that meet federal and state research eligibility criteria. |
| IRC § 41 (Internal Revenue Code Section 41) |
The federal statute that defines qualified research and serves as the foundation for Indiana's credit. |
| IRC § 41(b) (Definition of QRE) |
Federal guidelines defining qualified research expenses, specifically covering in-house research expenses and contract research costs. |
| IRC § 41(c) (Base Amount Definition) |
The federal definition used to establish the expenditure threshold that must be exceeded for credit eligibility. |
| IRC § 41(d) (Definition of Qualified Research) |
The four-part test determining whether activities qualify as technological, innovative, and experimental for tax purposes. |
| Base Amount (for REC) |
The average research expenditure level used as a benchmark to measure current year spending increases. |
| Fixed Base Percentage (for IQRE) |
A ratio used in the credit formula representing the taxpayer's historical Indiana research intensity relative to receipts. |
| Average Annual Gross Receipts (4 Prior Years) |
The mean of the taxpayer's total revenue over the four years preceding the current credit year. |
| Gross Receipts Attributable to Indiana |
Revenue generated from sales, services, or rentals specifically sourced to the state under Indiana law. |
| Taxpayer (IC § 6-3.1-4-1) |
Any individual or business entity subject to Indiana income tax that incurs qualified research expenses. |
| Pass-Through Entity (PTE) |
Business structures like S-corps or partnerships where research credits flow to individual owners' tax returns. |
| Adjusted Gross Income Tax (IC § 6-3) |
The primary Indiana tax against which the research expense credit may be applied for reduction. |
| Indiana Department of Revenue (DOR) |
The state agency responsible for managing tax collection and processing research expense credit claims and audits. |
| Schedule IN-EDGE-R (Research Expense Credit Form) |
The official tax form used by corporations to calculate and report their research expense tax credits. |
| Schedule IN K-1 (Pass-Through Credit) |
The document used to distribute research credits from a pass-through entity to its individual shareholders or partners. |
| Tiered Credit Rate (15% and 10%) |
Indiana's dual-rate system applying 15% to initial expenses and 10% to expenses exceeding a threshold. |
| $1 Million Threshold (for Tiered Rate) |
The expenditure level defining where the credit rate shifts from 15% down to 10% for IQREs. |
| Alternative Incremental Credit (AIC) |
An optional simplified calculation method for taxpayers based on a percentage of average historical research spending. |
| AIC 10% Rate (for Average QREs) |
The statutory rate applied under the alternative incremental method for research expenses exceeding certain average levels. |
| AIC 5% Rate (for Limited QRE History) |
The reduced rate applied when using the alternative incremental method with a limited historical research base. |
| Average IQRE (3 preceding taxable years) |
The mean of Indiana qualified research expenses calculated over the three years prior to the current year. |
| Carryforward Period (10 Years) |
The timeframe during which unused research credits can be applied to offset future Indiana tax liabilities. |
| Nonrefundable Credit |
A tax credit that can reduce liability to zero but will not result in a cash refund. |
| Research Conducted in Indiana |
Work activities that must physically take place within Indiana borders to qualify for the state credit. |
| Wages for Qualified Services (in Indiana) |
Employee compensation paid for performing, supervising, or supporting qualified research activities within the state. |
| Cost of Supplies (in Indiana) |
Tangible property consumed during the research process in Indiana, excluding land or depreciable capital equipment. |
| Contract Research Expenses (65% in Indiana) |
The portion of payments to third parties for Indiana-based research that is eligible for the credit. |
| Substantially All (Process of Experimentation) |
The requirement that at least 80% of research activities involve an iterative process of testing hypotheses. |
| Exclusion: Government-Funded Research |
Activities funded by federal, state, or local governments are generally excluded from being claimed as IQREs. |
| Exclusion: Research Outside Indiana |
Expenditures for research performed beyond Indiana's borders are disqualified from the Indiana state-specific tax credit. |
| Research and Development Sales Tax Exemption |
A separate Indiana tax benefit exempting certain R&D equipment and property from state sales tax. |
| Research and Development Equipment (Sales Tax) |
Tangible personal property used directly in research activities that may qualify for sales tax relief. |
| Research and Development Property (Sales Tax) |
Tangible assets used in experimental activities that meet the specific eligibility requirements for Indiana tax exemptions. |
| Ind. Code § 6-2.5-5-40 (Sales Tax Exemption) |
The Indiana statute providing for sales tax exemptions on equipment used primarily in qualified research development. |
| Internal Use Software Guidelines (DOR) |
Department of Revenue rules defining when software developed for a firm's own use qualifies for credits. |
| Funded Research Exclusions (DOR) |
Guidelines prohibiting credits for research where the taxpayer does not retain substantial rights or financial risk. |
| Disclosure of Reasons for Not Claiming the Federal Credit |
Requirement to explain why a state credit is sought if no corresponding federal credit was claimed. |
| 50% of Average IQRE (AIC Calculation) |
The base threshold used in the AIC method to determine the incremental portion of research spending. |
| Aerospace Contractor (Alternative Calculation) |
Specific calculation provisions designated for entities involved in the design and manufacture of aerospace defense systems. |
| United States Department of Defense Contractor |
An entity contracting with the DoD, often qualifying for specialized Indiana research expense credit computation rules. |
| IC § 6-3-2-29 (R&D Expense Decoupling) |
Indiana's legislative move to disconnect state tax treatment of R&D expenses from specific federal amortization requirements. |
| Full Deductibility of R&D Expenses (State) |
Indiana's policy allowing immediate deduction of research costs despite federal changes requiring long-term capitalization and amortization. |
| IRC § 174 (Amortization Decoupling) |
Indiana's rejection of federal rules requiring five-year amortization of R&D costs for state income tax purposes. |
| Grantor Trust (Beneficiary Eligibility) |
Provisions allowing beneficiaries of grantor trusts to claim their proportional share of research expense tax credits. |
