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Archived updates for Thursday, June 24, 2004

NJ Law Journal: Patents May Provide Research Tax Credit

According to an article in the June 7, 2004 issue of the New Jersey Law Journal, Congress will almost certainly enact another extension to the research tax credit expiring June 30, 2004.  This incremental credit is equal to the sum of 1) 20% of the excess of your qualified research expenditures for the taxable year over a base amount, and 2) 20% of your basic research payments.  However, in order to qualify for the credit, the information discovered from the research must be "technological:"
Issuance of a patent is conclusive evidence that the information discovered is technological in nature. In patent law, an innovation is patentable if it is useful, new, and nonobvious. The tax regulations, as a general matter, are similar to the patent rules in that the innovation clearly needs to be new and useful. In addition, the capability, method, or appropriate design of the innovation must be uncertain as of the beginning of the taxpayer's research activities. The "uncertainty" rule appears to be akin to the "non-obvious" rule for patent eligibility.
More information is available from IRS Form 6765.
Courtesy of William F. Heinze*
Thomas, Kayden, Horstemeyer & Risley, L.L.P.
100 Galleria Parkway, N.W., Suite 1750
Atlanta, GA 30339-5948  (USA)
Tel.:  (770) 738-2382
Fax:  (770) 951-0933
Mobile:  (404) 729-0729
E-Mail (business)
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*Admitted to practice in the Commonwealth of Virginia.  Not admitted in Georgia.
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