U.S. Individual Income Tax Return

Form

6765

Department of the Treasury
Internal Revenue Service
Name(s) shown on return

OMB No. 1545-0619

Credit for Increasing Research Activities
©

2008

Attach to your tax return.

Attachment
Sequence No.
Identifying number

81

Section A—Regular Credit. Skip this section and go to Section B or C if you are electing or previously elected (and are not revoking)
the alternative incremental credit or the alternative simplified credit, respectively.
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Certain amounts paid or incurred to energy consortia (see instructions)
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Basic research payments to qualified organizations (see instructions)
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Qualified organization base period amount
Subtract line 3 from line 2. If zero or less, enter -0Wages for qualified services (do not include wages used in figuring
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the work opportunity credit)
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Cost of supplies
7
Rental or lease costs of computers (see instructions)
Enter the applicable percentage of contract research expenses (see
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instructions)
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Total qualified research expenses. Add lines 5 through 8
10
Enter fixed-base percentage, but not more than 16% (see instructions)
11
Enter average annual gross receipts (see instructions)
12
Multiply line 11 by the percentage on line 10
13
Subtract line 12 from line 9. If zero or less, enter -014
Multiply line 9 by 50% (.50)
Enter the smaller of line 13 or line 14
Add lines 1, 4, and 15
No
Are you electing the reduced credit under section 280C? © Yes

If “Yes,” multiply line 16 by 13% (.13). If “No,” multiply line 16 by 20% (.20) and see the instructions
for the schedule that must be attached. Members of controlled groups or businesses under
common control: see instructions for the schedule that must be attached
Section B—Alternative Incremental Credit. Skip this section if you are completing Section A or C.
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Certain amounts paid or incurred to energy consortia (see the line 1 instructions)
Basic research payments to qualified organizations (see the line 2
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instructions)
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Qualified organization base period amount (see the line 3 instructions)
Subtract line 20 from line 19. If zero or less, enter -0Add lines 18 and 21
Multiply line 22 by 20% (.20)
Wages for qualified services (do not include wages used in figuring
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the work opportunity credit)
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Cost of supplies
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Rental or lease costs of computers (see the line 7 instructions)
Enter the applicable percentage of contract research expenses (see
the line 8 instructions)
Total qualified research expenses. Add lines 24 through 27
Enter average annual gross receipts (see the line 11 instructions)
Multiply line 29 by 1% (.01)
Subtract line 30 from line 28. If zero or less, enter -0Multiply line 29 by 1.5% (.015)
Subtract line 32 from line 28. If zero or less, enter -0Subtract line 33 from line 31
Multiply line 29 by 2% (.02)
Subtract line 35 from line 28. If zero or less, enter -0Subtract line 36 from line 33

For Paperwork Reduction Act Notice, see instructions.

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%

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Cat. No. 13700H

Form

6765

(2008)

Form 6765 (2008)

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Section B—Alternative Incremental Credit (continued)

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Multiply line 34 by 3% (.03)

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Multiply line 37 by 4% (.04)

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Multiply line 36 by 5% (.05)

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Add lines 23, 38, 39, and 40
Are you electing the reduced credit under section 280C? © Yes

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No

If “Yes,” multiply line 41 by 65% (.65). If “No,” enter the amount from line 41 and see the line 17
instructions for the schedule that must be attached. Members of controlled groups or businesses
under common control: see instructions for the schedule that must be attached

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Section C—Alternative Simplified Credit. Skip this section if you are completing Section A or B.
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59

Certain amounts paid or incurred to energy consortia (see the line 1 instructions)
Basic research payments to qualified organizations (see the line 2
44
instructions)
45
Qualified organization base period amount (see the line 3 instructions)
Subtract line 45 from line 44. If zero or less, enter -0Add lines 43 and 46
Multiply line 47 by 20% (.20)
Wages for qualified services (do not include wages used in figuring the
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work opportunity credit)
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Cost of supplies
51
Rental or lease costs of computers (see the line 7 instructions)
Enter the applicable percentage of contract research expenses (see
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the line 8 instructions)
53
Total qualified research expenses. Add lines 49 through 52
Enter your total qualified research expenses for the prior 3 tax years. If
you had no qualified research expenses in any one of those years, skip
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lines 55 and 56
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Divide line 54 by 6.0
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Subtract line 55 from line 53. If zero or less, enter -0-

%

● Line 56 by 12% (.12) for tax years ending before 2009,
● Line 56 by 14% (.14) for tax years ending after 2008, or
● Line 53 by 6% (.06) if you skipped lines 55 and 56.
Add lines 48 and 57
Are you electing the reduced credit under section 280C? © Yes
No
If “Yes,” multiply line 58 by 65% (.65). If “No,” enter the amount from line 58 and see the line 17
instructions for the schedule that must be attached. Members of controlled groups or businesses
under common control: see instructions for the schedule that must be attached
Multiply:

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48

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Section D—Summary
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65

Enter the portion of the credit from Form 8932, line 2, that is attributable to wages that were also
used to figure the credit on line 17, line 42, or line 59 (whichever applies)
Subtract line 60 from line 17, line 42, or line 59 (whichever applies). If zero or less, enter -0Credit for increasing research activities from partnerships, S corporations, estates, and trusts

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62

Add lines 61 and 62. Estates and trusts go to line 64; partnerships and S corporations, report
this amount on Schedule K; all others, report this amount on line 1c of Form 3800
Amount allocated to beneficiaries of the estate or trust (see instructions)
Estates and trusts: subtract line 64 from line 63. Report the credit on line 1c of Form 3800

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Form

6765

(2008)

Form 6765 (2008)

General Instructions
Section references are to the Internal
Revenue Code unless otherwise
noted.

What’s New
● The general credit rate for the
alternative simplified credit increased
from 12 percent to 14 percent.

Page

In addition, substantially all of the
activities of the research must be
elements of a process of
experimentation relating to a new or
improved function, performance,
reliability, or quality. The research
credit generally is not allowed for the
following types of activities.
● Research conducted after the
beginning of commercial production.

● The alternative incremental credit in
Section B will terminate for tax years
beginning after December 31, 2008.

● Research adapting an existing
product or process to a particular
customer’s need.

● The current year credit must be
reduced by the amount (if any) of the
credit for employer differential wage
payments.

● Duplication of an existing product or
process.

Purpose of Form

● Surveys or studies.
● Research relating to certain
internal-use computer software.

Use Form 6765 to figure and claim the
credit for increasing research
activities.

● Research conducted outside the
United States, Puerto Rico, or a U.S.
possession.

Who Must File

● Research in the social sciences,
arts, or humanities.

An individual, estate, trust,
organization, or corporation claiming a
credit for increasing research activities;
or any S corporation, partnership,
estate, or trust that allocates the credit
to its shareholders, partners, or
beneficiaries must complete this form
and attach it to its income tax return. If
you are a taxpayer that is not a
partnership or S corporation, and your
only source of this credit is from a
partnership, S corporation, estate, or
trust, you are not required to complete
or file this form, with the following
exception: you are a taxpayer that is an
estate or trust and the credit can be
allocated to beneficiaries. For more
details, see the Instructions for Form
1041, Schedule K-1, box 13.
Note: Corporations filing an amended
return to claim a refund of the
research credit, see Notice 2008-39,
I.R.B. 2008-13 684, available at
http://www.irs.gov/irb/2008-13_IRB/
index.html for information on where to
file.

Qualified Research
The research credit is generally allowed
for expenditures paid or incurred for
qualified research. Qualified research
means research for which expenditures
may be treated as section 174
expenses. This research must be
undertaken for discovering information
that is technological in nature, and its
application must be intended for use in
developing a new or improved
business component of the taxpayer.

● Research funded by another person
(or governmental entity).
If you incur qualified clinical testing
expenses relating to drugs for certain
rare diseases, you can elect to claim
the orphan drug credit for these
expenses instead of the research
credit. See Form 8820, Orphan Drug
Credit.
See section 41 and Regulations
sections 1.41-2 and 1.41-4 for other
definitions and special rules.

Special Rules
See section 41(f) and Regulations
sections 1.41-6, 1.41-6T, and 1.41-7
for special rules related to:
● Aggregation of expenditures for
members of controlled groups and
businesses under common control;
● Allocation of the credit by
partnerships, estates, and trusts;
● Adjustments, if a major portion of a
business is acquired or disposed of;
and
● Short tax years.
For special rules concerning the
allocation and apportionment of
research and experimental
expenditures between U.S. and
foreign source income, see sections
861 through 864.

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Member of
Controlled Group or
Business Under
Common Control
For purposes of figuring the credit, all
members of a controlled group of
corporations (as defined in section
41(f)(1)(A) and (f)(5)) and all members
of a group of businesses under
common control (as defined in section
41(f)(1)(B)), are treated as a single
taxpayer. As a member, compute your
credit based on your proportionate
share of qualified research expenses
and basic research payments giving
rise to the group’s research credit for
Section A, B, or C. Enter your share of
the credit on line 17, 42, or 59,
whichever applies. Attach a statement
showing how your share of the credit
was figured, and write “See Attached”
next to the entry space for line 17, 42,
or 59.
For special rules regarding the
election (or revocation of the election)
of the alternative incremental credit in
Section B by a controlled group of
corporations, see Regulations section
1.41-8.

Specific Instructions
You can:
● Claim the regular credit in
Section A,
● Elect the alternative incremental
credit in Section B, or
● Elect the alternative simplified credit
in Section C.
You may want to figure your credit
using all of the methods for which you
are eligible to get the maximum credit
allowed.
Once elected, the alternative
incremental credit or the alternative
simplified credit applies to the current
tax year and all later tax years, unless
you revoke the election. The
revocation for the alternative
incremental credit must be made on
an original return filed by the due date
(including extensions). See Regulations
section 1.41-8T. The revocation of the
alternative incremental credit may not
be made on an amended return. To
revoke a previous election of the
alternative incremental credit,
complete Section A or C.

Section A—Regular Credit
Skip this section and go to Section B
or C if:

Form 6765 (2008)

1. You are electing the alternative
incremental credit,
2. You are electing the alternative
simplified credit, or
3. You previously elected the
alternative incremental credit or the
alternative simplified credit and are not
revoking the election on this return.

Line 1
Enter the amounts you paid or
incurred to energy research consortia
for energy research. Energy research
does not include any research that is
not qualified research. In general, an
energy research consortium is any
organization described in section
501(c)(3), exempt from tax under
section 501(a), organized and
operated primarily to conduct energy
research, and not a private foundation.
See section 41(f)(6) for further details.
Any amount included on line 1
cannot be included elsewhere on the
return.

Line 2
Enter the amounts the corporation (not
to include S corporations, personal
holding companies, and service
organizations) paid in cash, under a
written contract, for basic research to
a qualified university, scientific
research organization, or grant
organization. See section 41(e) for
details, including the definitions of
qualified organizations.

Line 3
Enter the qualified organization base
period amount based on minimum
basic research amounts plus
maintenance-of-effort amounts for the
three preceding tax years. See section
41(e) for details.

Line 7
Enter the amount you paid or incurred
for the rental or lease of computers
used in qualified research. The
computer must be located off your
premises and you must not be the
operator or primary user of the
computer. Reduce this amount by the
amount that you (or any member of a
controlled group of corporations or
businesses under common control)
received or accrued for the right to
use substantially identical property.

Line 8
Enter the amounts you paid or
incurred, subject to the following
limitations.

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● 100% of amounts you paid (or
incurred) for qualified energy research
performed by: an eligible small
business, a university, or a federal
laboratory (see section 41(b)(3)(D) for
definitions of those entities). Also
include payments to those same
entities to the extent they are included
as basic research payments in line 2,
not to exceed the base period amount
in line 3.

for the 5th and 6th such tax years by
the aggregate gross receipts for those
tax years, then divide the result by 3.

● 75% of amounts you paid (or
incurred) for qualified research by a
qualified research consortium (as
defined by section 41(b)(3)(C)(ii)). Also
include 75% of the payments to a
qualified research consortium to the
extent they are included as basic
research payments in line 2, not to
exceed the base period amount in
line 3.
● 65% of amounts you paid (or
incurred) for all other qualified
research by any other person. Also
include 65% of the payments to that
person to the extent they are included
as basic research payments in line 2,
not to exceed the base period amount
in line 3.
Note. Prepaid contract research
expenses are considered paid in the
year the research is actually done.

● For the 9th tax year beginning after
1993 for which you have qualified
research expenses, divide the
aggregate qualified research expenses
for the 5th, 6th, 7th, and 8th such tax
years by the aggregate gross receipts
for those tax years, then divide the
result by 1.5.
● For the 10th tax year beginning after
1993 for which you have qualified
research expenses, divide the
aggregate qualified research expenses
for the 5th through 9th such tax years
by the aggregate gross receipts for
those tax years, then divide the result
by 1.2.

Line 10
The fixed-base percentage depends
on whether you are an existing
company or a start-up company.
A start-up company is a taxpayer
that had both gross receipts and
qualified research expenses either:
● For the first time in a tax year
beginning after 1983, or
● For fewer than 3 tax years beginning
after 1983 and before 1989.
The fixed-base percentage for a
start-up company is figured as follows.
● For the first 5 tax years beginning
after 1993 for which you have qualified
research expenses, the percentage is
3%.
● For the 6th tax year beginning after
1993 for which you have qualified
research expenses, divide the
aggregate qualified research expenses
for the 4th and 5th such tax years by
the aggregate gross receipts for those
tax years, then divide the result by 6.
● For the 7th tax year beginning after
1993 for which you have qualified
research expenses, divide the
aggregate qualified research expenses

● For the 8th tax year beginning after
1993 for which you have qualified
research expenses, divide the
aggregate qualified research expenses
for the 5th, 6th, and 7th such tax
years by the aggregate gross receipts
for those tax years, then divide the
result by 2.

● For the 11th and later tax years
beginning after 1993 for which you
have qualified research expenses,
divide the aggregate qualified research
expenses for any 5 of the 5th through
10th such tax years by the aggregate
gross receipts for those tax years.
The fixed-base percentage for an
existing company (any company that
is not a start-up company) is figured
by dividing the aggregate qualified
research expenses for the tax years
beginning after 1983 and before 1989
by the aggregate gross receipts for
those tax years.
The fixed-base percentage for all
companies (existing and start-up) must
be rounded to the nearest 1/100th of
1% (that is, four decimal places) and
cannot exceed 16%. In addition, when
figuring your fixed-base percentage,
you must reflect expenses for qualified
research conducted in Puerto Rico or a
U.S. possession for all prior tax years
included in the computation.
If short tax years are involved, see
Regulations section 1.41-3(b).
Reduce gross receipts by
returns and allowances. For
a foreign corporation,
CAUTION
include only gross receipts
that are effectively connected with a
trade or business in the United States
(or in Puerto Rico or a U.S.
possession, if applicable).

Form 6765 (2008)

Line 11
Enter the average annual gross
receipts (reduced by returns and
allowances) for the 4 tax years
preceding the tax year for which the
credit is being determined. You may
be required to annualize gross receipts
for any short tax year. For a foreign
corporation, include only gross
receipts that are effectively connected
with a trade or business in the United
States (or in Puerto Rico or a U.S.
possession, if applicable).
For a tax year that the credit
terminates, the average annual gross
receipts for the four tax years
preceding the termination tax year is
prorated for the number of days the
credit applied during the tax year. For
more information, see section 41(h).

Line 17
If you do not elect the reduced credit,
which can only be claimed on an
original timely filed return (with
extensions), you must reduce your
otherwise allowable deduction for
qualified research expenses or basic
research expenses by the amount of
the credit on this line. If the credit
exceeds the amount allowed as a
deduction for the tax year, reduce the
amount chargeable to capital account
for the year for such expenses by the
amount of the excess. Attach a
schedule to your tax return that lists
the deduction amounts (or capitalized
expenses) that were reduced. Identify
the lines of your return (schedule or
forms for capitalized items) on which
the reductions were made.

Section B—Alternative
Incremental Credit
Complete this section only if, instead
of the regular credit or the alternative
simplified credit:
1. You are electing the alternative
incremental credit, or

Page

2. You previously elected the
alternative incremental credit and are
not revoking the election on this
return.

Section C—Alternative Simplified
Credit
Complete this section only if, instead
of the regular credit or the alternative
incremental credit:
1. You are electing the alternative
simplified credit, or
2. You previously elected the
alternative simplified credit and are not
revoking the election on this return.

Line 54
Enter your qualified research expenses
for the prior three tax years. If the
credit terminates during the tax year,
prorate the qualified research
expenses for the prior three tax years
for the number of days the credit
applied during the tax year. For more
information, see section 41(h).

Section D—Summary
Line 60
If the credit on line 17, 42, or 59
includes amounts paid to employees
as wages, and you are also claiming a
credit for employer differential wage
payments based on payments you
made to the same employees, enter
on line 60 the portion of the credit
from Form 8932, line 2, that is
attributable to wages that were also
used to figure the credit on line 17,
line 42, or line 59 (whichever applies).
See Form 8932, Credit for Employer
Differential Wage Payments, for more
information on the credit.

Line 64
Estates and trusts. Allocate the credit
for increasing research activities on
line 63 between the estate or trust and
the beneficiaries in the same

5

proportion as income was allocated
and enter the beneficiaries’ share on
line 64.
Paperwork Reduction Act Notice.
We ask for the information on this
form to carry out the Internal Revenue
laws of the United States. You are
required to give us the information.
We need it to ensure that you are
complying with these laws and to
allow us to figure and collect the right
amount of tax.
You are not required to provide the
information requested on a form that
is subject to the Paperwork Reduction
Act unless the form displays a valid
OMB control number. Books or
records relating to a form or its
instructions must be retained as long
as their contents may become material
in the administration of any Internal
Revenue law. Generally, tax returns
and return information are confidential,
as required by section 6103.
The time needed to complete and
file this form will vary depending on
individual circumstances. The
estimated burden for individual
taxpayers filing this form is approved
under OMB control number 1545-0074
and is included in the estimates
shown in the instructions for their
individual income tax return.
The estimated burden for all other
taxpayers who file this form is shown
below. The estimated average time is:
Recordkeeping
16 hr., 15 min.
Learning about the law
or the form
2 hr., 22 min.
Preparing and sending the form
to the IRS
2 hr., 45 min.
If you have comments concerning
the accuracy of these time estimates
or suggestions for making this form
simpler, we would be happy to hear
from you. See the instructions for the
tax return with which this form is filed.