Early Years (The Beginning After The End Book 1) Download
Kym Cavrak
IRC 41, Credit for Increasing Research Activities, allows taxpayers a credit against income tax for increasing research activities ("research credit"). Generally, the research credit is equal to the sum of 20 percent of the excess (if any) of the taxpayer's qualified research expenses ("QREs") for the taxable year over the base amount. Taxpayers may elect to determine their credit under the alternative simplified credit (ASC) rules of IRC 41(c)(4), where the credit is equal to 14 percent of the QREs for the taxable year over 50 percent of the average QREs for the 3 taxable years preceding the credit year.
The Protecting Americans from Tax Hikes (PATH) Act of 2015 enacted IRC 41(h) and 3111(f), which allow a qualified small business ("QSB") to elect to apply a portion of the research credit for the taxable year as a payroll tax credit against the employer portion of the old-age, survivors, and disability insurance tax ("social security tax") under the Federal Insurance Contributions Act. This election is designed to benefit an eligible startup that has little or no income tax liability. The payroll tax credit is elected by completing the appropriate portion of Form 6765PDF and attaching the completed form to the QSB's timely filed (including extensions) income tax return for the taxable year to which the election applies. An election cannot be made with an amended return.
The QSB can first claim the payroll tax credit on its employment tax return for the first quarter that begins after it files the income tax return reflecting the payroll tax election on Form 6765 election. A QSB claiming the payroll tax credit on its employment tax return must complete Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities, and attach the completed form to the employment tax return.
For taxable years beginning after December 31, 2015, and before January 1, 2023, the maximum research credit that could be elected in a tax year to be applied toward payroll taxes was $250,000. The. The credit could be applied against the employer's share of social security tax, as imposed by IRC 3111(a), beginning with the first quarter that begins after the timely filing of the return on which the election was made. For employment tax returns covering taxable years beginning before January 1, 2023, the taxpayer may not use the payroll tax credit as a credit against any other employment tax liability and the credit may not be refunded in the absence of liability for the employer's portion of social security tax. For more information on the research credit itself, see the Instructions for Form 6765, Credit for Increasing Research ActivitiesPDF.
The IRA also modified IRC 3111(f) to allow a portion of the payroll tax credit to apply against the employer's portion of Medicare tax, as imposed by IRC 3111(b). Therefore, starting in the first quarter of 2023, the payroll tax credit is first used to reduce the employer's share of social security tax up to $250,000 per quarter and any remaining credit reduces the employer's share of Medicare tax for the quarter. Any remaining credit, after reducing the employer's share of social security tax and the employer's share of Medicare tax, is then carried forward to the next quarter. Form 8974PDF is used to determine the amount of the payroll tax credit that can be used in the current quarter.
For more information on the changes to the payroll tax credit and how it is computed and applied to employment tax returns, see the Instructions for Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities.
Note: If you, as a qualified small business, already filed your 2016 tax return, then you may still choose this option under a special rule for tax year 2016 by filing an amended return by December 31, 2017. See the notice for further details.
Step 2: Claim the payroll tax credit by completing Form 8974PDF. You must attach this form to your payroll tax return, for example, your Form 941, Employer's Quarterly Federal Tax Return. Further details on how and when to claim the credit can be found at About Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities.
If you are a Section 3504 agent or a Certified Professional Employer Organization (CPEO), then you may claim the payroll tax credit on behalf of a qualified small business client that elects to apply the research credit against payroll tax liability. For you to claim the credit, your client must be a qualified small business and must elect to apply the research credit against payroll tax liability by attaching Form 6765 to its timely-filed business income tax return. To claim the credit on behalf of a client:
Step 1: Claim the Qualified Small Business Payroll Tax Credit for Increasing Research Activities on a Form 941 filed under the Section 3504 agent's or CPEO's Employer Identification Number (EIN).
If you are a Non Certified PEO (including CPEO applicants not yet certified) that pays wages to individuals as part of the services provided to a client pursuant to a service agreement (such as collecting, reporting and/or paying or depositing employment taxes with respect to such wages), then you may claim the payroll tax credit on behalf of a qualified small business client. For you to claim the credit, your client must be a qualified small business and must elect to apply the research credit against payroll tax liability by attaching Form 6765 to its timely-filed business income tax return. To claim the credit on behalf of a client:
Step 2: Complete and attach Schedule R (Form 941) listing those clients electing to claim the Qualified Small Business Payroll Tax Credit for Increasing Research Activities and report the corresponding credits and all other amounts allocated to the listed clients. Check the 'Section 3504 Agent' box for 'Type of filer' at the top of the Schedule R. Enter the total wages and taxes paid for all other clients not separately listed on Schedule R and for your own employees on line 13 of Schedule R, so that the totals shown on line 14 match the amounts reported on the corresponding lines on Form 941.
Note: This required step for Non-Certified PEOs provides the necessary substantiation to enable the IRS to apply each client's research credit against the payroll tax liability reported on Form 941 under the PEO's EIN.
With an environment devoid of oxygen and high in methane, for much of its history Earth would not have been a welcoming place for animals. The earliest life forms we know of were microscopic organisms (microbes) that left signals of their presence in rocks about 3.7 billion years old. The signals consisted of a type of carbon molecule that is produced by living things.
Evidence for this Great Oxidation Event is recorded in changes in seafloor rocks. When oxygen is around, iron reacts chemically with it (it gets oxidized) and gets removed from the system. Rocks dating to before the event are striped with bands of iron. Rocks dating to after the event do not have iron bands, showing that oxygen was now in the picture.
After the initial pulse of oxygen, it stabilized at lower levels where it would remain for a couple billion years more. In fact, as cyanobacteria died and drifted down through the water, the decomposition of their bodies probably reduced oxygen levels. So, the ocean was still not a suitable environment for most lifeforms that need ample oxygen.
Cells also began living together, probably because certain benefits could be obtained. Groups of cells might be able to feed more efficiently or gain protection from simply being bigger. Living collectively, cells began to support the needs of the group by each cell doing a specific job. Some cells were tasked with making junctions to hold the group together, while other cells made digestive enzymes that could break down food.
These clusters of specialized, cooperating cells eventually became the first animals, which DNA evidence suggests evolved around 800 million years ago. Sponges were among the earliest animals. While chemical compounds from sponges are preserved in rocks as old as 700 million years, molecular evidence points to sponges developing even earlier.
The simple body plan of a sponge consists of layers of cells around water-filled cavities, supported by hard skeletal parts. The evolution of ever more complex and diverse body plans would eventually lead to distinct groups of animals.
By about 580 million years ago (the Ediacaran Period) there was a proliferation of other organisms, in addition to sponges. These varied seafloor creatures - with bodies shaped like fronds, ribbons, and even quilts - lived alongside sponges for 80 million years. Their fossil evidence can be found in sedimentary rocks around the world.
By the end of the Ediacaran, oxygen levels rose, approaching levels sufficient to sustain oxygen-based life. The early sponges may actually have helped boost oxygen by eating bacteria, removing them from the decomposition process. Tracks of an organism named Dickinsonia costata suggest that it may have been moved along the sea bottom, presumably feasting on mats of microbes.
However, about 541 million years ago, most of the Ediacaran creatures disappeared, signaling a major environmental change that Douglas Erwin and other scientists are still working to understand. Evolving animal body plans, feeding relationships, and environmental engineering may have played a role.
Burrows found in the fossil record, dating to the end of the Ediacaran, reveal that worm-like animals had begun to excavate the ocean bottom. These early environmental engineers disturbed and maybe aerated the sediment, disrupting conditions for other Ediacaran animals. As environmental conditions deteriorated for some animals, they improved for others, potentially catalyzing a change-over in species.
The Cambrian Period (541-485 million years ago) witnessed a wild explosion of new life forms. Along with new burrowing lifestyles came hard body parts like shells and spines. Hard body parts allowed animals to more drastically engineer their environments, such as digging burrows. A shift also occurred towards more active animals, with defined heads and tails for directional movement to chase prey. Active feeding by well-armored animals like trilobites may have further disrupted the sea floor that the soft Ediacaran creatures had lived on.
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