Cellulosic Ethanol Technology Research and Development Tax Credit

Businesses that incur qualified research and development expenses for cellulosic ethanol technology in Maryland are entitled to a tax credit. The total credits for all businesses may not exceed $250,000 per year.

This credit is available for tax years beginning after December 31, 2007, but before January 1, 2017.

The credit may be taken against corporate income tax or personal income tax. Sole proprietorships, corporations and pass through entities, such as partnerships, subchapter S corporations, limited liability companies and business trusts may claim the tax credit.

To qualify for the credit:

The business must invest in research and development activities in Maryland related to “Cellulosic Ethanol Technology,” which is technology that is used to develop cellulosic biomass for conversion to ethanol fuel. The business must also submit an application for the credit to the Maryland Department of Business and Economic Development (DBED) by September 15 of the calendar year following the end of the tax year in which the qualified research and development expenses were incurred. DBED certify the amount of credit available to the business by December 15.

How the credit is calculated:

The amount of the tax credit is equal to 10 percent of the qualified research and development expenses paid or incurred during the tax year.

DBED may not approve more than $250,000 in credits for any calendar year. If the aggregate amount of credits applied for exceeds $250,000, each applicant will receive a prorated share of the total credit amount.

If the credit is more than the state tax liability, the unused credit may be carried forward for the next 15 years.

Documentation required:

The business must file an amended income tax return (Form 500X or 510) and submit a copy of the certification received from DBED with the amended return.

Corporate income tax:

Form 500CR must be completed and submitted with the amended income tax return (Form 500X) along with the certification received from DBED.

Personal income tax:

Form 500CR must be completed and submitted with the amended income tax return (Form 502X). If the business is a pass-through entity, Form 500CR must be prepared for the pass-through entity and submitted with the entity’s income tax return (Form 510). A modified federal Schedule K-1 provided by the pass-through entity to its members must separately state their shares of the credit. Individuals or entities must attach this statement to the Form 500CR submitted with their personal (Form 502X), corporate (Form 500X) or pass-through entity (Form 510) amended income tax returns.

Contact:

Maryland Department of Business and Economic Development
Division of Business Development, Tax Incentives Group
217 E. Redwood St.
Baltimore, MD 21202
Phone: 410-767-6438 or 410-767-4980
E-mail: taxincentives@choosemaryland.org