A majority of tax and financial executives favor the research and development tax credit simplification proposed by the Senate, according to a survey by Grant Thornton.
The survey found that at least 60 percent of the 314 CEOs, CFOs, comptrollers, tax executives and other tax staff polled by Grant Thornton would either use or consider using the alternative simplified method to claim their research credit if Congress enacts the legislation passed by the Senate on Sept. 23 (see Senate Passes Tax Extenders and AMT Patch).
Sens. Max Baucus, D-Mont., and Chuck Grassley, R-Iowa, authored the bipartisan legislation now approved by the full Senate that would raise the rate for the alternative simplified credit to 14 percent. The alternative simplified credit method currently allows taxpayers to forego the traditional research credit in favor of a simplified version equal to 12 percent of qualified research expenses exceeding half of their average qualified research expenses over last 3 years.
If the legislation is enacted, 35 percent of respondents said they would definitely switch to the simplified method. Only 17 percent would rule it out. If the simplified credit were raised to 16 percent, which was proposed in earlier Grassley and Baucus bills, then over 46 percent of respondents would switch and less than 9 percent would rule it out.
Those surveyed indicated they were most interested in the simplified version for its simplicity rather than its potential for more tax savings or audit protection. Over 86 percent said they had a moderate or heavy interest in a simpler method for determining the credit.
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