A credit may be deducted from a taxpayer’s Kansas income tax liability if the taxpayer had qualifying expenditures in research and development activities conducted within Kansas (K.S.A. 79- 32,182b). Qualifying expenditures are expenditures made for research and development purposes (other than expenditures of monies made available to the taxpayer pursuant to federal or state law), which are expenses allowable for deduction under the provisions of the federal Internal Revenue Code of 1986 and amendments thereto.
The allowable credit is 6.5% of the amount by which the amount expended for the activities in the taxable year exceeds the taxpayer’s average of the actual expenditures. This is for the activities made in the taxable year and the two immediate preceding taxable years.
The amount of credit allowable in any one taxable year is limited to 25% of the total amount of the credit plus any applicable carry forward. The amount of any remaining unused credit may be carried forward until the total amount of the credit is used.
For tax year 2013, and all tax years thereafter, new credits shall be available to only corporations that are subject to the Kansas corporate income tax (i.e., C corporations). New credits are not available to individuals, partnerships, S corporations, limited liability companies, and other pass-through entities.
Carry Forward of Unused Credits: If this credit was earned prior to tax year 2013 and a carry forward credit remains available to a taxpayer, that taxpayer may continue to claim that credit. However, that carry forward credit shall be subject to limitations and requirements in place at the time the credit was earned.
Be sure to keep an itemized schedule of expenditures for amounts claimed on lines 1, 2a and 2b. KDOR (Kansas Department of Revenue) reserves the right to request this information as necessary.