Sec. 03.04.10.02. Calculation of Credit

A. The Maryland base percentage is:

(1) The percentage that the Maryland qualified research and development expense for the 4 taxable years immediately preceding the taxable year in which the expense is incurred is of the business entity's Maryland gross receipts for those years; or

(2) For a business entity that has fewer than 4 but at least 1 taxable year, the percentage as determined under §A(1) of this regulation using the number of immediately preceding taxable years that the business entity has.

B. The Maryland base amount is:

(1) For a business entity with gross receipts in at least 1 of the immediately preceding 4 taxable years, the product of multiplying the Maryland base percentage by the average annual Maryland gross receipts of the business entity for the 4 taxable years immediately preceding the credit year; or

(2) For a business entity with no Maryland gross receipts during any of the immediately preceding 4 taxable years, the Maryland base amount is zero.

C. Subject to the limitations of this regulation, the taxpayer may claim against the State income tax:

(1) The basic credit in the amount of 3 percent of the Maryland qualified research and development expenses, not exceeding the Maryland base amount for the business entity, paid or incurred by the business entity during the taxable year; and

(2) The growth credit in the amount of 10 percent of the amount by which the Maryland qualified research and development expenses paid or incurred by the business entity during the taxable year exceed the Maryland base amount for the business entity.