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How to Apply

Complete Form CT-1120 RDC and attach it to Form CT-1120K.

exceed $70 million and has not met the gross income test through transactions with a related person, as defined in Conn. Gen. Stat. §12-217w.

Forms are available anytime from the DRS website at www.ct.gov/DRS or by calling the DRS Forms Unit at 1-800-382-9463 (Connecticut calls outside the Greater Hartford calling area only) and selecting Option 2 from a touch-tone phone, or 860-297-4753 (from anywhere).

TTY, TDD, and Text Telephone users only may transmit inquiries anytime by calling 860-297-4911.

Attachments Required

The following information should be attached to Form CT-1120 RDC:

  • A full and complete description of the nature of the research projects conducted by the company during the income year, and the location(s) where the research is conducted;

  • A full and complete description of the methods used to obtain the total expenditures and payments for research and experimentation and basic research conducted in Connecticut, in accordance with Conn. Gen. Stat. §12-217n;

  • A detailed description of each source of information used to compute the credit, including the methods and calculations of expense allocation, if any; and

  • The job title and detailed description of each employee whose wages are included in the research expenditures.

Exchange of Tax Credit for Refund

A qualified small business that cannot take this tax credit in a taxable year in which it could otherwise be taken, as a result of having no tax liability, may exchange the credit with the State of Connecticut for a credit refund equal to 65% of the value of the credit or may elect to carry the credit forward as indicated above.

The definition of qualified small business used in determining whether the taxpayer is eligible for the exchange of this tax credit for a credit refund is different than the definition of qualified small business used in determining if the taxpayer is eligible for a tentative credit equal to 6% of research and development expenses.

A qualified small business may receive no more than $1,500,000 of credit refund for any one income year.

A qualified small business that reports no net income (prior to the application of net operating losses) or pays either the minimum tax of $250 or the capital base tax under Conn. Gen. Stat. §12-219 is permitted to exchange research and development tax credits.

A qualified small business that wishes to exchange tax credits must complete Form CT-1120 XCH, Application for Exchange of Research and Development or Research and Experimental Expenditures Tax Credits by a Qualified Small Business, and submit it with the final tax return for the income year. See Conn. Gen. Stat. § 12-217ee.

Where to Get Additional Information

Direct inquiries to:

Department of Revenue Services Taxpayer Services Division 25 Sigourney Street Hartford CT 06106

1-800-382-9463 (Connecticut calls outside the Greater Hartford calling area only), or 860-297-5962 (from anywhere)

www.ct.gov/DRS

REFERENCES:

Conn. Gen. Stat.§§12-217n and 12-217ee; Special Notice 93(21); 26 U.S.C. §§41 and 174

For the purpose of exchanging tax credits, qualified small business means a company that has gross income for the previous income year that does not

Informational Publication 2006(15), Guide to Connecticut Business Tax Credits Issued: 04/24/07

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