Rhode Island Code of Regulations
Title 280 - Department of Revenue
Chapter 20 - Division of Taxation
Subchapter 20 - TAX CREDITS/DEDUCTIONS
Part 14 - Research and Development Property Credit (280-RICR-20-20-14)
Section 280-RICR-20-20-14.5 - Leased/Rented Property

Universal Citation: 280 RI Code of Rules 20 20 14.5

Current through September 18, 2024

A. Partially leased/rented to others: Generally, a taxpayer is not allowed a credit for realty or tangible personalty including buildings and structural components of buildings which it leases or rents to any other person or corporation. However, if real property (buildings) is principally used by the taxpayer in research and development and is partially rented or leased or leased to others, the basis of the property must be adjusted for that proportionate share of non-qualifying use.

B. EXAMPLES: RST Corporation, a calendar year corporation, acquires a five story building (with each story of equal square footage) on October 1, 1994. The basis of the building is $200,000.

1. The taxpayer rents or leases out three floors and uses the remaining two floors for research and development in the experimental or laboratory sense. Since less than 50% of the building is used for research and development in the experimental or laboratory sense, no credit is allowed on any part of the building.

2. The taxpayer rents or leases out two floors and uses the remaining three floors for research and development in the experimental or laboratory sense. Since more than 50% of the building is used for research and development in the experimental or laboratory sense, credit will be allowed on that part of the building which is not leased.

3. The taxpayer does not rent/lease any of the building; uses three floors for research and development in the experimental or laboratory sense; and uses the other two floors for office space. Since more than 50% of the building is used for research and development in the experimental or laboratory sense and none is leased, credit will be allowed on the entire building.

C. Leased/rented from any other person or corporation: A taxpayer is not allowed a credit for realty or tangible personalty including buildings and structural components of buildings which it leases from any other person or corporation. Any contract or agreement to lease or rent or for a license to use the property shall be considered a lease unless such contract or agreement is treated for federal income tax purposes as an installment purchase rather than as a lease. In order to be considered the owner of the research and development property, the taxpayer must be allowed federal depreciation on such property.

D. User of the property: Since property rented to others (rather than principally used by the taxpayer in research and development) does not qualify for the credit, the credit shall not be allowed where the purchaser is not the user of the research and development property even where the purchaser and the user may be included in a consolidated federal and/or consolidated state tax return.

Disclaimer: These regulations may not be the most recent version. Rhode Island may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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