ACA § 26-51-1102, as amended by Act 203 of 2019 there is granted a credit against a taxpayer’s Arkansas corporate income tax or Arkansas individual income tax for the following types of donations or sales, or both, of new machinery and equipment to a qualified educational institution in connection with a qualified education program or qualified research program such as: donations of new machinery and equipment; sales below cost of machinery and equipment; and cash donations for the purchase of new machinery and equipment by a qualified educational institution.
ACA § 26-51-1103, as amended by Act 1607 of 2007, allows up to one-hundred percent (100%) offset of income tax liability after all other credits and reductions in tax have been calculated. The credit shall be claimed in the year of the qualified research expenditure, donation, or sale. However, all or part of any unused credit may be carried over to and claimed in succeeding tax years until the credits are exhausted or until the end of the nine (9) tax years succeeding the tax year of the qualified research expenditure, donation, or sale, whichever occurs earlier.
Effective July 31, 2007 Act 1607 of 2007 granted a credit against a taxpayer’s Arkansas corporate income tax or Arkansas individual income tax equal to thirty-three-percent (33%) of a donation made to an accredited institution of higher education to support a research park authority.
ACA § 26-51-1104 as amended by Act 2013 of 2019 Documentation required.
To claim the credit granted by ACA § 26-51-1102, the taxpayer shall provide the following for each piece of machinery and equipment donated, sold below cost, or purchased by a qualified educational institution with a cash donation:Â
An affidavit from the receiving qualified educational institution that the qualified educational institution has received the machinery and equipment; the machinery and equipment is new machinery and equipment within the meaning of this subchapter; the qualified educational institution received the machinery and equipment as a donation or, if the qualified educational institution purchased the machinery and equipment, a statement of the amount paid for the machinery and equipment; and the machinery and equipment has been donated, purchased by the qualified educational institution with a cash donation provided by a taxpayer, or sold to the qualified educational institution for use in a qualified education program or a qualified research program; and in the case of a donation or sale by a retail or wholesale business, a copy of the invoice from the business' supplier showing the actual cost of the machinery and equipment. In the case of a donation or sale below cost by a manufacturer, a copy of the manufacturer's wholesale price list showing the lowest price of the machinery and equipment for which credit is claimed. In the case of a purchase by a qualified educational institution with a cash donation, itemized receipts documenting the amount of the cash donation and the purchase costs of the new machinery and equipment.
To claim the credit granted by ACA § 26-51-1102, the taxpayer shall show that the Executive Director of Arkansas Economic Development Commission and the Director of the Department of Higher Education have approved the qualified research expenditure as a part of a Qualified Research Program.
Copies of each of the above documents shall be filed by the taxpayer with the Arkansas Economic Development Commission and with his or her return as an attachment to the form prescribed by the Director of the Department of Finance and Administration.Â
To claim the credits authorized, attach to the tax return the documentation required in ACA §26-51-1104.
For additional information, contact Arkansas Economic Development Commission at (501) 682-1121 or visit their website at http://arkansasedc.com/ or Department of Higher Education at (501) 371-2000 or visit their website at www.adhe.edu.