Research and Development Credit
INCOME TAXPAYER-Effective for all taxable years beginning after Dec. 31, 1987.
Beginning in tax year 2013, this credit shall only be available to corporations that are subject to the Kansas corporate income tax, i.e. C corporations. This credit shall not be available to individuals, partnerships, S corporations, limited liability companies, and other pass-through entities.
Beginning in tax year 2023, new credits shall be available to all income taxpayers.
The Kansas research and development credit allows a taxpayer who makes expenditures in research and development activities in Kansas to claim an income tax credit.
Qualifications
Expenditures made for research and development purposes must be allowable under the provisions of the federal internal revenue code of 1986.
Credit Amount
The credit is 6.5 percent of the difference between the actual qualified research and development expenses for the year and the average of the actual expenditures made during the year and the two previous tax years.
For all taxable years commencing after December 31, 2022, the credit is 10% of the difference between the actual qualified research and development expenses for the year and the average of the actual expenditures made during the year and the two previous tax years.
Submit Application
For tax year 2023, a taxpayer may submit Form K-204 to request verification of the amount of credit available for transfer. If a taxpayer does not submit Form K-204, the taxpayer must complete the K-53W Worksheet and include it with the Schedule K-53 when filing the taxpayer’s income tax return. If a taxpayer submits Form K-204 and does not receive a Tax Credit Certificate Number, the taxpayer must complete the K-53W Worksheet and include it with the Schedule K-53 when filing the taxpayer’s income tax return. However, a taxpayer only claiming a transferred credit does not need to submit the K-53W Worksheet, but must complete Schedule K-53 and include it when filing the taxpayer’s income tax return.
Transfer of Credit
For tax year 2023 and all tax years thereafter, new research and development tax credits can be transferred by a taxpayer without a current tax liability to any person and be claimed by the transferee in the tax year it was transferred. Only the full credit may be transferred, and the credit may only be transferred one time. Only the entity that earned the credit is allowed to transfer the credit. The credit claimed by the transferee may be carried forward by the transferee, however, the carry forward shall not be subject to limitations and requirements in place at the time the credit was earned.
Form K-260 must be completed and submitted to the Department to document a transfer. A transferor must submit the K-53W Worksheet for the credit that has been transferred with the transferor’s income tax return.
Limitation of Credit
The credit allowed in any one tax year is limited to 25 percent of the credit plus any carry forward. Any remaining unused credit may be carried forward in 25 percent increments until the total amount of credit is used.
Procedures to Claim the Credit
For tax year 2022 and prior, you may download Schedule K-53 to claim the research and development credit. For tax year 2023, you may download Schedule K-53 and K-53W Worksheet (if applicable) to claim the research and development credit. This schedule must be completed and submitted with the income tax return.
You may also call the Department of Revenue voice mail system at 785-296-4937 to request applicable forms. You will be asked to give your name, address, phone number and form(s) you desire. Please allow two weeks for delivery of your forms.