Internal Revenue Code (“I.R.C.”) § 41 provides taxpayers with a tax credit for making payments to energy research consortiums. This energy research consortium tax credit is equal to twenty percent of the amounts paid. The tax credit can be taken in addition to the regular research tax credit or alternative simplified tax credit and the basic research tax credit.
Energy Research Consortium
Energy research consortiums include organizations, other than private foundations, that are tax exempt under I.R.C. § 501(c)(3). The organizations must be operated primarily to conduct energy research. At least five unrelated persons must have made contributions to the organization for energy research during the year and no single person can have contributed 50 percent or more of the total amounts received by the organization during the year.
The term “energy research” is not defined in the I.R.C. Presumably, energy research must somehow relate to energy. This may include all types of energy, such as electric, oil and gas, nuclear, atomic, and other types of energy. It is not clear whether the research must also be qualified research as required for the regular and alternative simplified research tax credits.
Energy Research Payments
It is not clear what qualifies as a payment for purposes of the energy research consortium tax credit. Payments could conceivably include investment arrangements, reimbursement arrangements, contributions, and other cash and non-cash transfers.