Nebraska State Specific Glossary of Terms and Meanings

Nebraska Advantage Research and Development Act Overview

The Nebraska Advantage Research and Development Act offers refundable tax incentives to businesses conducting qualified research activities within the state. This glossary defines key statutory terms, forms (such as Worksheet RD and Form 3800N), and calculation factors required to claim the credit, which is generally based on the federal credit allowed under IRC Section 41.

Nebraska Advantage Research and Development Act: Nebraska law establishing R&D tax incentives.
Neb. Rev. Stat. § 77-5803: Statute defining the research tax credit.
Qualified Research Expenses (QREs): Eligible costs for calculating the credit.
Federal Credit Allowed Under IRC Section 41: Credit is based on federal credit amount.
Research and Experimental Activities: Activities qualifying for tax credit benefits.
Internal Revenue Code (IRC) Section 174: Federal rules for deducting research expenditures.
Business Firm: Entity engaging in business within Nebraska.
Base Credit Rate (15%): Standard credit rate for most businesses.
University Campus Credit Rate (35%): Higher rate for research on campus.
College or University in this State: Accredited higher education institution in Nebraska.
Facility Owned by a College or University: Research site located on university property.
Basic Research Payments: Payments to universities for scientific advancement.
Refundable Tax Credit: Excess credit is paid as refund.
Income Tax Liability: Tax owed before applying credits.
State Sales and Use Taxes Paid: Credit can offset sales tax liability.
Quarterly Refund Claim: Request for refund filed every quarter.
Apportionment Factor: Ratio determining Nebraska taxable income share.
Property Factor (for apportionment): Real estate and tangible property ratio.
Payroll Factor (for apportionment): Employee compensation ratio for Nebraska.
Business Both Within and Without this State: Multi-state business allocating income to Nebraska.
Worksheet RD: Form to calculate the Nebraska credit.
Form 3800N: Nebraska tax incentive credit calculation form.
Nebraska Incentives Credit Computation: Calculation of total available state incentives.
Taxable Year: Fiscal period for tax reporting purposes.
Credit Carry Forward: Unused credit applied to future years.
Maximum Carry Forward Period (20 years): Time limit to use carried forward credits.
Nebraska Department of Revenue (DOR): Agency administering state tax laws.
Tax Commissioner: Head official of Nebraska Department of Revenue.
Income Tax Return: Form filing annual income and tax.
Electronic Verification of Work Eligibility: Mandatory E-Verify check for employees.
Newly-Hired Employees in Nebraska: Staff added to Nebraska payroll recently.
Substantial Rights to Research: Ownership of research results is retained.
Bear the Economic Risk: Financial loss if research fails.
Wages for Qualified Services: Pay for employees doing R&D work.
Supplies Used in Research: Materials consumed during experimentation process.
Contract Research Expenses: Costs paid to third parties for R&D.
In-House Research Expenses: R&D costs incurred internally by company.
Qualified Services: Tasks directly related to qualified research.
Process of Experimentation Test: Systematic evaluation of alternatives to succeed.
Elimination of Uncertainty Test: Effort to discover unknown technical information.
Technological in Nature: Based on principles of hard science.
Permitted Purpose: Intent to improve performance or quality.
Business Component Test: Item being improved or developed.
New or Improved Business Component: Innovation enhancing product or process function.
Funded Research Exclusion: Grant-funded work is not eligible.
Pass-Through Entities: Business structures passing income to owners.
Partner, Member, Shareholder, Beneficiary: Owners receiving passed-through tax credits.
Credit Distribution to Owners: Allocating credits based on ownership percentage.
Interest Not Allowed on Refunded Taxes: No interest paid on credit refunds.