Jun 02 2010

Guidance for the Therapeutic Discovery Tax Credit

Credit you give yourself is not worth having.

– Irving Thalberg

For all you virtual biotechs and small start-up biotechs that survived the “Great Recession,” here is something to look forward to.  I’ve mentioned the Therapeutic Discovery Tax Credit before, but only in passing.  Now, though, the FDA Law Blog has brought to my attention that the IRS has released some information on the credit and how to apply for it.  Because FDA Law Blog is, not surprisingly, a legal blog (and one of my favorite blogs), I’ll use a pseudo-legal format to provide links and info on the tax credit:

Exhibit A: The IRS’s webpage on the Affordable Care Act Tax Provisions.

Exhibit B:  The US Treasury’s press release about the Therapeutic Discovery Credit.

Exhibit C: The IRS Notice on the Therapeutic Discovery Credit.  See Appendix A on PDF page 25 for the information on how to apply for the tax credit.

Exhibit D: A fact sheet from the US Treasury on the tax credit.  Key points about the credit are (from the fact sheet):

  • The tax credit is effective immediately and covers up to 50 percent of the cost of qualifying biomedical research.
  • The credit will be allocated among projects that show significant potential to produce new and cost‐saving therapies, support good jobs, and increase U.S. competitiveness.
  • The credit is only available to smaller firms: those with 250 workers or fewer.
  • Firms can opt to receive a grant instead of a tax credit, so start-ups that are not yet profitable can benefit as well.
  • The credit is worth up to 50 percent of the cost of qualifying investments, up to a maximum credit of $5 million per firm and $1 billion overall.
  • The credit is effective for investments made in 2009 and 2010.

Also, this money will most likely be spent on CMC, pre-IND GLP tox studies, Phase 1 and even early Phase 2 studies.  Not too shabby.