Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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347.0000 MANUFACTURING EQUIPMENT—Regulation 1525.2

Annotation 347.0890

347.0890 Research and Development Activities. A taxpayer, who is prequalified for the partial exemptions under section 6377, regularly withdraws tangible personal property from its resale inventory for use in R&D activities. The taxpayer's R&D activities come within the provisions of Internal Revenue Code section 174 and the taxpayer self-reports tax on the cost of this property.

Under these facts, the taxpayer is entitled to take a partial exemption against the amount of tax it self-reports when it withdraws its ex-tax inventory for use in its R&D activities. (Regulation 1525.2(a)(2).) The taxpayer must report the tax it owes on this property and claim the partial exemption on the return for the period in which it removes the property from its ex-tax inventory and uses it in the R&D activities. 1/21/97.