Rhode Island Research Tax Credit Glossary
This glossary provides essential definitions for the Rhode Island Research and Development Tax Credit statutes. It covers critical concepts including Qualified Research Expenses (QREs), property credits, and relevant sections of the Rhode Island General Laws (Title 44) and Internal Revenue Code to assist taxpayers in compliance and claim calculation.
| Glossary Term | Definition |
|---|---|
| Credit for Qualified Research Expenses | Tax incentive for incurring eligible costs in R&D activities within Rhode Island. |
| Qualified Research Expenses (QREs) | Wages, supplies, and contract research costs directly attributable to qualified research activities. |
| Base Period Research Expenses | Historical R&D spending benchmark used to calculate the incremental research tax credit amount. |
| R.I. Gen. Laws § 44-32-3 | Statute establishing the credit for qualified research expenses against Rhode Island business taxes. |
| R.I. Gen. Laws § 44-32-2 | Statute granting credits for purchasing or constructing research and development property in Rhode Island. |
| Credit for Research and Development Property | Incentive providing a tax credit for acquiring tangible property used for R&D. |
| Tangible Personal Property | Physical assets like machinery and equipment used primarily for research and development purposes. |
| Structural Components of Buildings | Elements like walls or wiring excluded from R&D property credits unless specialized for research. |
| Placed in Service | The specific point in time when an asset is ready and available for use. |
| Experimental or Laboratory Sense | Activities conducted to test hypotheses, eliminate uncertainty, or develop new technical business components. |
| Ordinary Testing or Inspection | Routine quality control checks that do not qualify as eligible research and experimentation activities. |
| Efficiency Surveys | Management activities focused on operation improvement, generally excluded from qualified research tax credit claims. |
| Management Studies | Internal reviews of business organization or efficiency, excluded from qualified research and development activities. |
| Consumer Surveys | Market research activities regarding consumer preferences, strictly excluded from qualified research expense calculations. |
| Advertising, Promotions | Marketing activities promoting products or services, ineligible for research and development tax credits. |
| Research in connection with literary, historical, or similar projects | Non-technical research activities that are statutorily excluded from qualifying for R&D tax credits. |
| Tax Imposed by Chapters 11, 17, or 30 of Title 44 | Specific Rhode Island tax chapters against which the research credits can be applied. |
| Tax Imposed by Chapter 30 of Title 44 (Personal Income Tax) | Rhode Island personal income tax liability against which pass-through R&D credits may be applied. |
| Tax Imposed by Chapter 11 of Title 44 (Business Corporation Tax) | Corporate income tax liability against which the research credit is applied for corporations. |
| Tax Imposed by Chapter 17 of Title 44 (Insurance Gross Premiums Tax) | Tax on insurance companies against which specific research and development credits may be applied. |
| Minimum Fixed Tax (R.I. Gen. Laws § 44-11-2(e)) | The mandatory minimum tax amount that credits cannot reduce a corporation’s liability below. |
| Carryover (Maximum Seven (7) Years) | Unused tax credits may be carried forward to offset future tax liabilities for seven years. |
| Consolidated Return (Limitation) | Credits generated by one member cannot offset liability of other members in consolidated returns. |
| Partnership, Joint Venture or Small Business Corporation (Credit Division) | Pass-through entities allocate credits to owners based on their pro-rata share of income. |
| Investment Tax Credit (R.I. Gen. Laws § 44-31-1) | General investment credit that cannot be claimed on the same property as R&D credits. |
| Credit for Research and Development Property (R.I. Gen. Laws § 44-32-2) | Specific 10% credit for tangible personal property used in research and development facilities. |
| Research and Development Expenses Credit (280-RICR-20-20-2) | Regulatory guidance detailing the calculation and substantiation of the Rhode Island R&D expense credit. |
| Internal Revenue Code (26 U.S.C. § 41) | Federal tax code section defining qualified research expenses adopted by Rhode Island for compliance. |
| Internal Revenue Code (26 U.S.C. § 167) | Federal depreciation rules applicable to determining the basis of property for R&D credits. |
| Internal Revenue Code (26 U.S.C. § 168) | Accelerated cost recovery system rules used to classify and depreciate R&D property assets. |
| Internal Revenue Code (26 U.S.C. § 179(d)) | Definitions regarding expense deductions for certain property used in calculating state tax basis. |
| Property and Casualty Insurance Companies Research | Specific rules allowing insurance companies to claim credits against gross premiums tax liability. |
| Form RI-7695E (Research & Development Expense Credit) | Official tax form used to calculate and claim the Rhode Island research expense credit. |
| Schedule B-CR (Business Entity Credit Schedule) | Summary schedule where total business credits, including R&D, are reported on the return. |
| R&D Property Cost or Other Basis | The capitalized cost of the asset used to calculate the 10% property credit. |
| New Research and Development Facilities Deduction (R.I. Gen. Laws § 44-32-1) | One-year write-off deduction for constructing or reconstructing facilities used for research and development. |
| Elective Deduction Against Allocated Entire Net Income | Option to deduct R&D facility costs from net income instead of capitalizing depreciation. |
| Entire Net Income Allocated to this State | The portion of total net income apportioned to Rhode Island for tax purposes. |
| One-year Write-off of New Research and Development Facilities | Accelerated deduction allowing full expensing of facility costs in the year incurred. |
| Property Acquired by Purchase | Assets bought by the taxpayer, distinct from leased assets, eligible for specific credits. |
| Situs in this State | Requirement that the research property or activity must be physically located within Rhode Island. |
| Use in Taxpayer’s Trade or Business | Requirement that the property must be actively used in the company’s commercial operations. |
| Leasing Property (Deduction/Credit Limitation) | Leased property generally does not qualify for the R&D property credit or facility deduction. |
| Tangible Property which is New, Not Used | Requirement that property must be new to the taxpayer to qualify for certain credits. |
| Depreciation Practice | The method used to expense assets over time, relevant for basis and deduction calculations. |
| Credit Utilization Limit (50% of Tax Due) | Cap limiting the amount of credit used to fifty percent of tax liability. |
| Taxable Year | The calendar or fiscal year period for which the tax return is filed. |
| Tax Administrator | The official responsible for administering Rhode Island tax laws and auditing credit claims. |
| Research and Experimentation Expenditures (R&E Expenditures) | Costs incurred in the experimental nature of developing or improving products or processes. |
| Process of Experimentation Test | Requirement to evaluate alternatives to eliminate uncertainty regarding the development of a component. |
