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BABC Member BDO 




On December 18, 2015, President Obama signed the Protecting Americans from Tax Hikes (“PATH”) Act of 2015, which includes a provision making permanent the Research & Development (“R&D”) tax credit under Section 41.  This is a very significant development, as the R&D credit generally has required annual legislative renewal.  A permanent R&D credit will provide businesses and investors the stability needed to enhance long term planning and decision making.

Added Benefits

In addition to being made permanent, for tax years beginning after December 31, 2015, the R&D tax credit will have two added benefits.  First, eligible small businesses (those that are privately held and with $50 million or less in average gross receipts for the three preceding tax years) may utilize the R&D tax credit against their Alternative Minimum Tax (“AMT”). Historically, businesses could only use the R&D tax credit to offset ordinary tax liability and only to the extent this liability exceeded their AMT, with one exception to this rule in 2010.