Georgia Revenue & Taxation Code § 48-7-40.12

Tax credit for qualified research expenses

(a) As used in this Code section, the term:

(1) “Base amount” means the product of a business enterprise’s Georgia gross receipts in the current taxable year and the average of the ratios of its aggregate qualified research expenses to Georgia gross receipts for the preceding three taxable years or 0.300, whichever is less; provided, however, that a business enterprise need not have had a positive taxable net income for the preceding three taxable years in order to claim the credit provided in this Code section. For purposes of this paragraph, “Georgia gross receipts” shall be the numerator of the gross receipts factor provided in subsection (d) of Code Section 48-7-31.

(2) “Broadcasting” means the transmission or licensing of audio, video, text, or other programming content to the general public, subscribers, or to third parties via radio, television, cable, satellite, or the Internet or Internet Protocol and includes motion picture and sound recording, editing, production, postproduction, and distribution. “Broadcasting” is limited to establishments classified under the 2007 North American Industry Classification System Codes 515, broadcasting; 519, Internet publishing and broadcasting; 517, telecommunications; and 512, motion picture and sound recording industries.

(3) “Business enterprise” means any business or the headquarters of any such business which is engaged in manufacturing, warehousing and distribution, processing, telecommunications, broadcasting, tourism, and research and development industries. Such term shall not include retail businesses.

(4) “Qualified research expenses” means qualified research expenses for any business enterprise as that term is defined in Section 41 of the Internal Revenue Code of 1986, as amended, except that all wages paid and all purchases of services and supplies must be for research conducted within the State of Georgia.

(b) A tax credit is allowed a business enterprise which has qualified research expenses in Georgia in a taxable year exceeding a base amount, provided that the business enterprise for the same taxable year claims and is allowed a research credit under Section 41 of the Internal Revenue Code of 1986, as amended.

(c) The tax credit provided in subsection (b) of this Code section shall be 10 percent of the excess over the base amount referred to in said subsection.

(d) Any unused credit claimed under this Code section may be carried forward ten years from the close of the taxable year in which the qualified research expenses were made. The credit taken in any one taxable year shall not exceed 50 percent of the business enterprise’s remaining Georgia net income tax liability after all other credits have been applied.

(e) In the first five years of a newly formed business enterprise’s operations in this state, where the amount of a credit claimed under this Code section exceeds 50 percent of a taxpayer’s liability for such taxes in a taxable year, the excess may be taken as a credit against such taxpayer’s quarterly or monthly payment under Code Section 48-7-103. Each employee whose employer receives credit against such taxpayer’s quarterly or monthly payment under Code Section 48-7-103 shall receive a credit against his or her income tax liability under Code Section 48-7-20 for the corresponding taxable year for the full amount which would be credited against such liability prior to the application of the credit provided for in this subsection. Credits against quarterly or monthly payments under Code Section 48-7-103 and credits against liability under Code Section 48-7-20 established by this subsection shall not constitute income to the taxpayer.

HISTORY: Code 1981, § 48-7-40.12, enacted by Ga. L. 1997, p. 461, § 9; Ga. L. 1998, p. 128, § 48; Ga. L. 2008, p. 874, § 3/HB 1246; Ga. L. 2009, p. 654, § 4/HB 439.