Are R&D Tax Credits Available in Alaska?
No. While companies located in Alaska may qualify for the Federal Research and Development (R&D) Tax Credit, Alaska no longer offers the credit at the state level at this time. However, Alaska provides a state tax credit equal to eighteen percent (18%) of a company's federal-based credits, which includes the research and development tax credit. This credit provides a dollar-for-dollar offset against Alaska tax liabilities. See IRC § 38 for a complete list of federal-based credits eligible for the state credit. Here is a summary of the credit:
- If the taxpayer is taxable both inside and outside Alaska, the credit is calculated by apportioning the federal credits generated
- A taxpayer may not apply credits attributable to Alaska against Alaska alternative minimum tax or other taxes
- Unused federal-based credits may be carried back & forward as provided under the Internal Revenue Code (1 year up to 20 years, respectively).
- To claim the credit, a company must file Alaska Form 6390 – Alaska Federal-based Credits along with its state tax return.
Alaska R&D Tax Credit Case Study
An Anchorage company designs and manufactures components for the oil & gas industry. The company claims Federal R&D credits each year for the development activities of its engineers. This project involved a multi-year study.
The Company qualified for the federal R&D Tax Credit of $330,000 and an additional $59,010 of state R&D Tax Credit in Alaska.
|Year||Total QREs||Credit||Federal Credits||Alaska Credit|
Get More Information About the R&D Tax Credit
The R&D Tax Credit, first enacted in 1981, has been one of the most valuable credits leveraged by companies. Every year, the R&D credit yields billions of dollars in federal and state benefits to companies engaged in qualifying research. This credit provides much-needed cash to hire additional employees, increase R&D, expand facilities, and more. Thousands of companies take advantage of the credit across several industries. » Learn More
Qualified research activities are defined by the four-part test outlined below
Research and Development Tax Insights
Section 174 and R&E – Uncertainty and Questions
Section 174 and R&E – Uncertainty and Questions Thought Leadership by KBKG, 5/23/2023 Many businesses, small and large, rely on research and development to improve their offerings, compete with international markets, and increase profits. The implications of recent changes to section 174 and no movement from Congress have left many business owners unsure of how … Read More
IRC/Multistate Corporate Income Tax Comparison Guide
IRC/Multistate Corporate Income Tax Comparison Guide Friday, May 5, 2023 – Thought Leadership by R&D | KBKG Note: The data in the chart is only current as of the publish date of this blog. We expect this data to change. Research and experimental expenditures are essential to many businesses, especially in technology, manufacturing, and healthcare. … Read More
IRS Issues Revenue Ruling on the Deductibility of R&E Expenditures
IRS issues Revenue Ruling on the Deductibility of Research and Experimental Expenditures by Jonathan Tucker, Principal | KBKG, 4/18/2023 Revenue Ruling 58-74 No Longer Applicable – The IRS issued Revenue Ruling 2023-8, making obsolete Revenue Ruling 58-74 on a prospective basis as of July 31, 2023. This means that taxpayers can no longer file an amended … Read More
Mississippi Allows Businesses to Deduct Research or Experimental Expenditures
By Jon Tucker, Principal | Published Monday, April 3rd, 2023 On Monday, April 3, 2023, Mississippi passed H.B. 1733, a change in the Mississippi State Income Tax Law. The law allows businesses to elect to fully deduct research or experimental expenditures in the year they are incurred. It suggests changing the methods of depreciation used … Read More
American Innovation and Jobs Act Aims to Expand R&D Tax Credits and Address Confusion Over Section 174 Rules
American Innovation and Jobs Act Aims to Expand R&D Tax Credits and Address Confusion Over Section 174 Rules Thought Leadership by KBKG, 3/23/2023 On March 17, 2023, Senators Maggie Hassan (D-NH) and Todd Young (R-IN) reintroduced the American Innovation and Jobs Act (“The Act”). This act aims to expand the refundable R&D Credit and will extend … Read More
AICPA Pens Letter Urging Congress to Defer R&D Expense Capitalization (Sec 174) Provision Until 2026
On February 14, 2023, the American Institute of Certified Public Accountants (AICPA) sent a letter urging Congress to address expired and expiring tax provisions to avoid needless complexity and ambiguity. More specifically, the AICPA called on Congress to defer the Internal Revenue Code Section 174 amortization requirement for research and experimental expenditures until 2026. The … Read More
IRS Issued Additional Guidance on Section 174, Specified Research or Experimental Expenditures
This article has been updated from its original posting on Dec. 15, 2022. The Treasury Department and Internal Revenue Service (IRS) issued Revenue Procedure 2023-11 providing updated guidelines for accounting method changes for the treatment of specified research or experimental expenditures under Section 174 that changed with the Tax Cuts and Jobs Act of 2017 … Read More
KBKG Tax Insight: Tax Court Denies Construction Company R&D Credits
A summary judgment was recently granted when the government successfully argued that a construction company did not conduct qualified research activities during the tax year in question and was therefore not entitled to the $576,756 refund they were paid. In this case, the defendant was a shareholder of a civil construction company and the contested … Read More
An Introduction to the Reverse Plea to the U.S. Senate and House of Representatives to Extend Section 174
Over 150 U.S.-based businesses and trade associations recently issued a plea to the U.S. Senate and U.S. House of Representatives leadership urging Congress to extend Section 174 provisions allowing taxpayers to deduct 100% of Section 174 R&E expenditure in the year they were incurred. Historically, 100% of Section 174 R&E expenditures could be 1) deducted … Read More
This Month’s Webinars
Looking for CPE credit? We have several sessions available this month. Click the links below to register. If you have questions or need help registering, please email [email protected] Research & Development Tax Credits 11/1/2022 | 12:00 PM PT | 1 hour | 1 CPE credit This webinar will cover the fundamentals of the Research and … Read More