How to generate Form 6765 partnership Increasing Research Credit in ProConnect Tax

This article will assist you with generating Form 6765, Credit for Increasing Research Activities, in the Partnership and Individual return. Use the applicable instructions below for your module.

What's new for Form 6765 for tax year 2024:

• If you have reported Qualified Research Expenses (QREs) on line 48, you must complete Section E.
• If you are eligible and choose to follow the new ASC 730 directive, check “Yes” on line 41.
• New Section F—Qualified Research Expenses Summary. In this section, indicate if you are required to complete Section G and enter your total QREs on each applicable line.
• New Section G—Business Component Information. For tax years beginning after 2024, Section G will be required, subject to the guideline. For tax years beginning before 2025, Section G will be optional for all filers.

Table of contents:

To enter amounts for the Form 6765 in the Partnership module:

1. Go to Input Return ⮕ Schedule K ⮕ Credits ⮕ Other Credits
2. Select the Investment & Research tab.
3. Scroll down to the Increasing Research Credit (6765) section.
4. Check the box labeled Electing alternative simplified credit, if applicable.
5. Check the box labeled Elect reduced credit (Section 280C), if applicable.
   • This will mark the boxes on lines 17 and 34 "Yes"
   • The amount on line 16 will be multiplied by 15.8% and the amount on line 33 will be multiplied by 79%
6. Enter the applicable expenses in the remaining fields to flow to Form 6765

The credit will flow to the Schedule K(1065), Line 15f, Other Credits, and to the Schedule K-1, Box 15 with a code L.

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If entering this information from a passthrough K-1 into a 1065 return:

1. Go to Input Return ⮕ Schedule K ⮕ Passthrough K-1's
2. Select the Lines 12-19 tab.
3. Scroll down to the Credits (15) section.
4. Under the Other Credits (15) subsection, enter the amount in Credit for increasing research (M)

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To enter amounts for the Form 6765 in the S Corporation module:

1. Go to Input Return ⮕ Schedule K ⮕ Credits ⮕ Schedule K Credits
2. Select the Investment & Research tab.
3. Scroll down to the Increasing Research Credit (6765) section.
4. Select the box Electing alternative simplified credit, if applicable.
5. Select the box Elect reduced credit (Section 280c), if applicable.
   • If this box is selected, Lacerte will mark Yes on Line 17. 
   • ProConnect Tax will multiply the amount on Line 16 by 13% and the amount on Line 40 by 65%.
6. Enter the applicable expenses in the remaining fields to flow to Form 6765.

The credit will flow to the Schedule K(1120S), Line 13g, Other Credits, and to the Schedule K-1, Box 13 with a code M.

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To enter Form 6765 in a Corporate return:

1. Go to Input Return ⮕ Credits ⮕ General Business Credits.
2. Select the Investment & Research tab.
3. Scroll down to the Increasing Research Credit (6765) section.
4. Check the box labeled Electing alternative simplified credit, if applicable.
5. Check the box labeled Electing reduced credit (Section 280C), if applicable.
   • This will mark the boxes on lines 17 and 34 "Yes"
   • The amount on line 16 will be multiplied by 15.8% and the amount on line 33 will be multiplied by 79%
6. Make any other applicable entries in this section for expenses that should flow to the 6765

The amount of credit will be calculated on the 6765 and flow from there to the 3800 and then to the 1120, page 3, Schedule J, part I, line 5c.

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To enter Form 6765 in the Individual module:

1. Go to Input Return ⮕ Credits ⮕ General Business and Vehicle Cr.
2. Under the Credits section, use the Form (Click on arrow to select from list) drop down input to choose the form this credit is applicable to
3. In the Activity drop down input, choose the applicable business activity for this credit.
4. Select the Investment & Research tab.
5. Scroll down to the Increasing Research Activities Credit (6765)
6. Check the box labeled Electing alternative simplified credit, if applicable
7. Check the box labeled Elect reduced credit (Section 280C)
   • Checking this box will mark the boxes on lines 17 and 34 as "Yes"
   • The amount on line 16 will be multiplied by 15.8% and the amount on line 33 will be multiplied by 79%.
8. Check the box labeled Eligible small business for Form 6765 ONLY, if applicable
9. Make any other applicable entries for expenses in this section to flow to the 6765

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If entering this information from a partnership K-1:

1. Go to Input Return ⮕ Income ⮕ Passthrough K-1's ⮕ Partnership Info (1065 K-1)
2. Select the Lines 11-20 tab.
3. Scroll down to the Line 15 - Credits and Withholding section
4. Find the (15M) Increasing Research Credit subsection
5. Enter the Amount of credit

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If entering this information from an S corporation K-1:

1. Go to Input Return ⮕ Income ⮕ Passthrough K-1's ⮕ S-Corp Info (1120S K-1)
2. Select the Lines 11-17 tab.
3. Scroll down to the Line 13 - Credits and Withholding section
4. Find the (13M) Increasing Research Credit subsection
5. Enter the Amount of credit

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Entering Increasing Research Activities Credit carryover for an individual return

Solution #1:  To enter prior year 'Increasing Research Activities Credit' carryover amounts for 'General Business Carryforwards' (Form 3800, page 3, Part IV, check box C):

1. Go to Input Return ⮕ Credits ⮕ General Business and Vehicle Cr.
2. In the upper right corner, select Carryovers/Misc. Info.
3. Scroll down to the Business Credit Carryforwards and Carrybacks (3800) section.
4. In the Credit Type (Click on button to expand) field, click on the + sign next to Form 3800, Part IV, Line 1 Credits.
5. Select Increasing research activities (6765).
6. Enter the amount under the General Business Carryforwards column.

Solution #2: To enter prior year 'Increasing Research Activities Credit' carryover for 'General Business Credit From a Passive Activity' (Form 3800 page 3, Part IV check box A):

1. Go to Input Return ⮕ Credits ⮕ General Business and Vehicle Cr.
2. Under the Credits section, use the Form (Click on arrow to select from list) drop down input to choose the form this credit is applicable to
3. In the Activity drop down input, choose the applicable business activity for this credit.
4. Scroll down to the Prior Year Unallowed Credits section.
5. Enter the amount in the field labeled Carryover in the Increasing Research Activities subsection.

Solution #3: To enter prior year 'Increasing Research Activities Credit' carryover for 'General Business Credit From a Passive Activity' (Form 3800 page 3, Part IV check box B):

1. Go to Input Return ⮕ Credits ⮕ General Business and Vehicle Cr.
2. Go to the Credits section.
3. Select the Form from the drop down menu.
4. Select the Activity name or number from the drop down menu.
5. Scroll down to the Prior Year Unallowed Credits section.
6. In the Other Passive Credit Carryovers subsection, select Increasing Research Activities (6765) from the Credit Type dropdown.
7. Enter the amount in General Business Credit.

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