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Fore! New York Tees Off on QETC Credits for Hollow Metal Golf Ball Production




by:
Andrew D. Appleby
Sutherland Asbill & Brennan LLP - New York Office

Jeffrey A. Friedman
Sutherland Asbill & Brennan LLP - Washington Office

 
March 4, 2014

Previously published on February 21, 2014

The New York State Department of Taxation and Finance issued an Advisory Opinion regarding the availability of Qualified Emerging Technology Company (QETC) facilities, operations and training credits pertaining to purchases of patents and other property related to hollow metal golf ball production. The Department stated that QETC credits for “research and development property” are available only for “tangible property” that is used for “purposes of research and development in the experimental or laboratory sense.” The Department opined that the taxpayer’s purchase of intangible property, including patents, trade secrets and technological know-how, did not qualify as research and development property for QETC credit purposes. However, the Department stated that the taxpayer’s purchase of prototypes and designs of tangible property may qualify as research and development property if the property is used for research and development in the laboratory sense. The Department explained that property is used for research and development in the experimental or laboratory sense if: (1) the information available to the taxpayer does not establish the capability or method for developing or improving a product or process (i.e., an uncertainty exists); and (2) the property is used in an activity intended to discover information that would eliminate this uncertainty. The Department also opined that the taxpayer could not claim QETC credits for “qualified research expenses” because such credits were available for “expenses associated with in-house research” and associated “dissemination” costs, and the taxpayer had not developed the patents and other property in-house but had purchased the property from a third party. N.Y. Advisory Opinion, TSB-A-14(1)C (Jan. 27, 2014).

 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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Andrew D. Appleby
Jeffrey A. Friedman
Sutherland Asbill & Brennan LLP
 
New York Office
Washington Office
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Taxation
 
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