Basic Research Tax Credit

Internal Revenue Code (I.R.C.) § 41 provides taxpayers with a basic research tax credit for entering into contracts with certain non-profit organizations to perform basic research.  The basic research tax credit is equal to twenty percent of total payments for qualified basic research (”QBR”) above a “qualified organization base period amount” (”QOBPA”).  The QOBPA is ….

Basic research means “any original investigation for the advancement of scientific knowledge not having a specific commercial objective.” 

The basic research tax credit applies only to payments for QBR performed pursuant to written contract with an educational institution, non-profit scientific research organizations (excluding private foundations), and certain grant-giving organizations.