By Lance Hardin, CPA, senior tax manager at Hughes Pittman & Gupton, LLP

RALEIGH, N.C. – With the July 21 deadline to apply for the Qualifying Therapeutic Discovery Project Credits looming, now is the time for life science executives to act to receive a portion of the $1 billion in government funding available.

These Patient Protection and Affordable Care Act tax credits and grants are targeted toward projects that show significant potential to produce or sustain U.S. jobs, increase American competitiveness or introduce therapies that may reduce long-term health care costs.

To claim the credit, qualified investments must be certified by the National Institute of Health. Applications include both Form 8942 and a Project Information Memorandum. They must be completed and postmarked by July 21 to qualify for the program.

The credit may only be applied for by taxpayers with no more than 250 employees and covers up to 50 percent of their qualified investment. It is available for qualified investments made or to be made in 2009 and 2010. The amount of the credit which a taxpayer may be allocated is limited to a maximum of $5 million.

Here are several links to make the application process easier:

• — http://www.irs.gov/newsroom/article/0,,id=224512,00.html
• — http://www.ustreas.gov/press/releases/reports/5.21.10%20therapeutic%20discovery%20fact%20sheet.pdf
• — http://www.irs.gov/pub/irs-drop/n-10-45.pdf
• — http://www.irs.gov/pub/irs-pdf/f8942.pdf
• — http://www.irs.gov/pub/irs-pdf/i8942.pdf
• — http://grants.nih.gov/grants/funding/QTDP_PIM/QTDP_PIM.pdf
• — http://grants.nih.gov/grants/funding/QTDP_PIM/QTDPReviewProcess_Diagram_Final_Final.pdf

The Department of Health and Human Services will evaluate each project for eligibility by September 30, 2010. Based on the department’s recommendations, the IRS will issue certifications by October 29, 2010.

The project information memorandum has strict limits on word count, and the evaluator needs to agree with the applicant’s explanation of why their project qualifies. With only one chance to get the application right, a financial professional experienced with similar tax credits and grants should review the application.

This is an excellent opportunity for start-up and mid-sized companies to fund projects that could improve American’s health, so act now.

The views expressed do not necessarily represent , LLP or Hughes Pittman & Gupton, LLP policy and cannot be relied upon as accounting or tax advice. The outcome of any specific matter depends upon the specific facts and circumstances in which the matter arises. Check with a qualified adviser before taking any action.

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