Form 6765 - Credit for Increasing Research Activities for a Pass-Thru Entity

Under IRC section 174 a business can elect to deduct research and experimental expenses rather than capitalize them.

Form 6765 has several purposes:

• Calculate and claim the credit for research activities.
• Make the reduced credit election under IRC section 280C.
• For a Qualified Small Business, calculate the payroll tax credit if desired.

If a partnership or S corporation is claiming this credit, they will complete Form 6765 and pass the credit through to the partners or shareholders on Schedule K-1.

In the form, you'll select whether to complete Section A for the Regular Credit or Section B for the Alternative Simplified Credit (ASC). Once elected, the ASC continues for future years unless the Regular Credit is selected in a future year's return, provided the return is timely filed.

Partnership Return (Form 1065)

To enter the credit amount, from the Main Menu of the tax return (Form 1065) select:

• Schedule K - Distributive Share Items
• Credits and Credit Recapture
• General Business Credits
• Current Year General Business Credit
• Form 6765 (Research) - Double-click and complete the form.

S Corporation Return (Form 1120-S)

To complete Form 6765, from the Main Menu of the S corp return (Form 1120-S) select:

• Schedule K - Distributive Share Items
• Credits
• General Business Credits
• Current Year General Business Credit
• Form 6765 (Research) - Double-click and complete the form.

Note: This article provides navigational guidance for Form 6765, Credit for Increasing Research Activities in a pass-through entity return. It is not intended as tax advice.

Additional Information:

Form 6765 Instructions - Credit for Increasing Research Activities