Internal Revenue Bulletin:  2005-36 

September 6, 2005 

Announcement 2005-63

Credit for Increasing Research Activities; Correction


AGENCY:

Internal Revenue Service (IRS), Treasury.

ACTION:

Correcting amendment.

SUMMARY:

This document corrects temporary regulations (T.D. 9205, 2005-25 I.R.B. 1267) that were published in the Federal Register on Tuesday, May 24, 2005 (70 FR 29596). The document contains temporary regulations relating to the computation and allocation of the credit for increasing research activities for members of a controlled group of corporations or a group of trades or businesses under common control.

DATES:

This correction is effective on May 24, 2005.

FOR FURTHER INFORMATION CONTACT:

Nicole R. Cimino, (202) 622-3120 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The temporary regulations (T.D. 9205) that is the subject of this correction are under section 41(f).

Need for Correction

As published, the temporary regulations (T.D. 9205) contain errors that may prove to be misleading and are in need of clarification.

* * * * *

Correction of Publication

Accordingly, 26 CFR Part 1 is corrected by making the following correcting amendment:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for part 1 continues to read in part as follows:

Authority: 26 USC 7805 * * *

§1.41-6T [Corrected]

1. Section 1.41-6T(e) Example 2 (i), the first line in the table is revised to read as follows:

  D E F G Group Aggregate
Credit Year QREs $580x $10x $70x $15x $675x
* * * * *          

2. Section 1.41-6T(e) Example 2 (i), second line in the table needs to be revised to read “$25x”.

  D E F G Group Aggregate
Credit Year QREs * * *        
* * * $500x $25x $100x $25x $650x

3. Section 1.41-6T(e) Example 2 (ii)(B)(1), the first sentence is revised to read as follows: “The group’s base amount equals the greater of: the group’s fixed-base percentage (3.10 percent) multiplied by the group’s aggregate average annual gross receipts for the 4 taxable years preceding the credit year ($17,000x), or the group’s minimum base amount ($337.50x).”

4. Section 1.41-6T(e) Example 2 (iii), the eighth sentence is revised to read as follows: “Because the group credit of $29.76x is greater than the sum of the stand-alone entity credits of all the members of the group ($21.67x), each member of the group is allocated an amount of the group credit equal to that member’s stand-alone equity credit.”

5. Section 1.41-6T(e) Example 2 (iii), the ninth sentence is revised to read as follows: “The excess of the group credit over the sum of the members’ stand alone entity credits ($8.09x) is allocated among the members of the group based on the ratio that each member’s QREs bear to the sum of the QREs of all the members of the group.”

6. Section 1.41-6T(e) Example 2 (iii), the fourth line in the table is revised to read as follows:

  D E F G Total
* * * * *          
Excess Group Credit $8.09x $8.09x $8.09x $8.09x  
* * * * *          

7. Section 1.41-6T(e) Example 3 (ii)(C), the second sentence is revised to read as follows: “The excess of the group credit over the sum of the members’ stand-alone entity credits ($10.00x) is allocated among the members of the group based on the ratio that each member’s QREs bear to the sum of the QREs of all the members of the group.”

8. Section 1.41-6T(e) Example 3 (ii)(C), the fourth line in the table is revised to read as follows:

  DE F G Total
* * * * *        
Excess Group Credit $10.00x $10.00x $10.00x  
* * * * *        

9. Section 1.41-6T(e) Example 3 (iii)(C), the fourth line in the table is revised to read as follows:

  D E Total
* * * * *      
Excess Group Credit $6.83x $6.83x  
* * * * *      

10. Section 1.41-6T(e) Example 5 (iii), the first sentence is revised to read as follows: “Under paragraph (c)(2) of this section, the stand-alone entity credit for each member of the group must be computed using the method that results in the greater stand-alone entity credit for that member.”

11. Section 1.41-6T(j), the second sentence is revised to read as follows: “Generally, a taxpayer may use any reasonable method of computing and allocating the credit for taxable years ending before May 24, 2005.”

Guy Traynor,
Acting Chief, Publications and Regulations Branch,
Legal Processing Division,
Associate Chief Counsel
(Procedure and Administration).

Note

(Filed by the Office of the Federal Register on August 11, 2005, 8:45 a.m., and published in the issue of the Federal Register for August 12, 2005, 70 F.R. 47108)


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