00                       CS FOR HOUSE BILL NO. 118(FIN)                                                                    
01 "An Act relating to a tax credit for qualified research and development expenditures;                                   
02 and providing for an effective date."                                                                                   
03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
04    * Section 1. AS 43.20 is amended by adding a new section to article 1 to read:                                     
05            Sec. 43.20.047. Qualified research and development tax credit. (a) Subject                                 
06       to the terms and conditions of this section and in addition to any other credit                                   
07       authorized to the taxpayer by this chapter, a taxpayer may apply 20 percent of the                                
08       taxpayer's expenditure for qualified research and development attributable to this state                          
09       for the taxable year that exceeds the base amount as a credit not to exceed $10,000,000                           
10       against the state tax liability imposed on the taxpayer under this chapter.                                       
11            (b)  Qualified research and development expenditures are attributable to this                                
12       state if the research and development is being conducted in this state or the payroll of                          
13       employees conducting the research and development is in this state. In this subsection,                           
14       payroll of an employee is in this state if compensation is paid to an employee in this                            
01       state and reported as paid in this state in the quarterly contribution report under                               
02       AS 23.20 to the Department of Labor and Workforce Development.                                                    
03            (c)  If the tax credit under this section exceeds the taxpayer's tax liability after                         
04       other tax credits are taken under this chapter for the year in which the expenditure is                           
05       incurred, the excess of the tax credit over the liability may be carried forward for up to                        
06       seven years. If an unused credit is carried forward to a tax year from an earlier year,                           
07       the credit arising in the earliest year is applied first against the tax liability for the year.                  
08            (d)  A person may not claim a credit under this section for qualified research                               
09       and development expenditures that were deducted in the calculation of tax liability                               
10       under AS 43.20.011(e) or for which any other credit, including any federal credit, has                            
11       been claimed under this title.                                                                                    
12            (e)  Each year, if three or more taxpayers claim the credit authorized under this                            
13       section during the immediately preceding year, the department shall report to the                                 
14       legislature the number of taxpayers who claimed credits under this section in the prior                           
15       year, the total cumulative amount of credits granted to all taxpayers under this section                          
16       for the prior tax year, a description of the research and development projects for which                          
17       the credit was granted, and the total cumulative number of employees conducting the                               
18       research and development for which all taxpayers claim the credit.                                                
19            (f)  In this section,                                                                                        
20                 (1)  "base amount" means the average of qualified research and                                          
21       development expenditures attributable to this state for the three tax years immediately                           
22       preceding the taxable year for which the credit is being claimed;                                                 
23                 (2)  "qualified research and development" has the meaning given to                                      
24       "qualified research" in 26 U.S.C. 41(d) (Internal Revenue Code), as amended, that is                              
25       attributable to this state.                                                                                       
26    * Sec. 2. This Act takes effect immediately under AS 01.10.070(c).