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Base Amount Example: MQREs in All Years
Base Amount Example: MQREs in All Years
Example Explanation
A business is applying for the Research and Development (R&D) Tax Credit in Year 4 and needs to calculate its base amount to determine eligibility:
- Determine MQREs for the three prior calendar years:
- Year 1: $20,000
- Year 2: $25,000
- Year 3: $30,000
- Add the MQREs from the years with expenses.
- $20,000 + $25,000 + $30,000 = $75,000
- Divide the total by the number of years with MQREs.
- $75,000 ÷ 3 = $25,000
To Qualify For the Credit
To qualify for the R&D Tax Credit in Year 4, the business’s MQREs must exceed its base amount of $25,000.