Alternative simplified credit can now be used

Alternative Simplified Credit (ASC) Can Now Be Used

Bruce Stubbs, JD, LLM

Alternative Simplified Credit (ASC) Can Now Be Used

By Bruce Stubbs, JD, LLM
AGH Specialized Tax Solutions
June 3, 2014

Effective for tax years ending on or after June 3, 2014, the IRS has amended
Reg. §1.41-9(b)(2) and removed a restriction that prevents taxpayers from making an election on an amended return to compute the research credit using the alternative simplified credit (ASC) computational method under I.R.C. Sec. 41(c)(5).

A temporary regulation is added to provide that the ASC election for a tax year may be made on an amended return provided that the credit for that tax year was not previously claimed on an original or amended return.

In addition, a reminder for taxpayer was included that a member of a controlled group may not make an ASC election for a tax year on an amended return if any member of the controlled group previously claimed the research credit for that tax year using a method other than the ASC method on an original or amended return.

A taxpayer may apply the regulations to a tax year ending prior to June 2, 2014, if the taxpayer makes the ASC election before the period of limitations for assessment of tax expires for that tax year.

The text of the temporary regulations also serves as the text of proposed regulations. The new regulations expire on June 2, 2017.

If you have any questions, please contact Bruce Stubbs, AGH Specialized Tax Solutions Vice President at bruce.stubbs@aghsts.com or toll free 844-787-2121.

Any discussion of tax matters contained herein is not intended or written to be tax advice, and cannot be relied upon as such, nor can it be used for the purpose of: (i) avoiding tax penalties that may be imposed by the IRS or states, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. If you seek definitive tax advice on a matter, please request a written tax memorandum from your AGH tax advisor.