I am new to R&D Credits...please bear with me..
My client is self employed....single... reports his business on schedule C.
For 2022 he had 30,000 of R&D expense paid to an outside scientific firm for help in developing a new product.
He has never before had any R&D expenses.
I am required to amortize the 30,000 over a 5 year period...using half year convention for first year....correct?
This gives him an amortization deduction of 3,000 for 2022...ie....30,000 divided by 5 years is 6,000 times 1/2 is 3,000 for 2022 deduction.
However....his 30,000 of R&D expense entitles him to a R&D credit on form 6765 of 1,800...ie...30,000 times 6% is 1,800..correct?
I am required to subtract the 1,800 credit from the 3000 amortization deduction...giving him a net deduction of 1,200 on schedule C...correct???
So for 2022 he has a deduction of 1,200 on schedule C and a credit of 1,800 on form 6765...correct???
Or......
30,000 of R&D expense....subtract 1,800 of R&D credit...gives him net of 28,200 R&D Expense...divided by 5 years is 5,640...times 1/2 is 2,820 deduction for 2022
This approach gives him a deduction on schedule C of 2,820..and a credit of form 6765 of 1,800...correct???
Is either of these aproaches correct?
I have scoured the internet...and TTB, to find an example of how this is to be done with no luck...
Thanks,
Harvey
My client is self employed....single... reports his business on schedule C.
For 2022 he had 30,000 of R&D expense paid to an outside scientific firm for help in developing a new product.
He has never before had any R&D expenses.
I am required to amortize the 30,000 over a 5 year period...using half year convention for first year....correct?
This gives him an amortization deduction of 3,000 for 2022...ie....30,000 divided by 5 years is 6,000 times 1/2 is 3,000 for 2022 deduction.
However....his 30,000 of R&D expense entitles him to a R&D credit on form 6765 of 1,800...ie...30,000 times 6% is 1,800..correct?
I am required to subtract the 1,800 credit from the 3000 amortization deduction...giving him a net deduction of 1,200 on schedule C...correct???
So for 2022 he has a deduction of 1,200 on schedule C and a credit of 1,800 on form 6765...correct???
Or......
30,000 of R&D expense....subtract 1,800 of R&D credit...gives him net of 28,200 R&D Expense...divided by 5 years is 5,640...times 1/2 is 2,820 deduction for 2022
This approach gives him a deduction on schedule C of 2,820..and a credit of form 6765 of 1,800...correct???
Is either of these aproaches correct?
I have scoured the internet...and TTB, to find an example of how this is to be done with no luck...
Thanks,
Harvey