Under IRC section 174 a business can elect to deduct research and experimental expenses rather than capitalize them.
Form 6765 has several purposes:
- Calculate and claim the credit for research activities.
- Make the reduced credit election under IRC section 280C.
- For a Qualified Small Business, calculate the payroll tax credit if desired.
If a partnership or S corporation is claiming this credit, they will complete Form 6765 and pass the credit through to the partners or shareholders on Schedule K-1.
In the form, you'll select whether to complete Section A for the Regular Credit or Section B for the Alternative Simplified Credit (ASC). Once elected, the ASC continues for future years unless the Regular Credit is selected in a future year's return, provided the return is timely filed.
Partnership Return (Form 1065)
Form 6765 is not included with the partnership return. You will need to complete the form outside TaxSlayer Pro and enter the credit amount in the return. To enter the credit amount, from the Main Menu of the tax return (Form 1065) select:
- Schedule K - Distributive Share Items
- Credits & Credit Recapture
- Other Credits
- Credit for increasing research activities - Enter the credit amount.
S Corporation Return
To complete Form 6765, from the Main Menu of the S corp return (Form 1120-S) select:
- Schedule K - Distributive Share Items
- Credits
- Other Credits and credit recapture
- Credit for Increasing Research Activities - Complete the form.
Note: This article provides navigational guidance for Form 6765, Credit for Increasing Research Activities in a pass-through entity return. It is not intended as tax advice.
Additional Information:
Form 6765 Instructions - Credit for Increasing Research Activities