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Base Amount Example: One Year Had No MQREs

Base Amount Example: One Year Had No MQREs

Example Explanation

A business is applying for the Research and Development (R&D) Tax Credit in Year 8 and needs to calculate its base amount to determine eligibility:

  1. Determine MQREs for the three prior calendar years:
    1. Year 5: $0
    2. Year 6: $15,000
    3. Year 7: $25,000
  2. Add the MQREs from the years with expenses.
    1. $15,000 + $25,000 = $40,000
  3. Divide the total by the number of years with MQREs.
    1. $40,000 ÷ 2 = $20,000

To Qualify For the Credit

To qualify for the R&D Tax Credit in Year 8, the business’s MQREs must exceed its base amount of $20,000.

Additional Examples

MQREs in All Years

No Prior MQREs