Rockville CPA Services

Equity Compensation and Biotech Credits in Rockville's Life-Sciences Corridor

Match each equity award to the year it is taxed

IRS Publication 525 treats each type of award differently. Exercising an incentive stock option adds nothing to regular income but can create an alternative minimum tax adjustment. Selling the shares within two years of grant or one year of exercise generally makes the gain ordinary income up to the spread at exercise; any further gain is capital gain, and a sale at a loss produces no ordinary income. A nonstatutory option without a readily determinable value is generally taxed when exercised, and restricted stock is taxed as it vests unless a Section 83(b) election is filed within 30 days of the transfer. We reconcile grant agreements and Forms W-2, 3921 and 1099-B so the basis of each sale includes compensation income already reported. IRS Publication 525, Taxable and Nontaxable Income (stock options and restricted property).

Secure the biotechnology investment credit before investing

Maryland's Biotechnology Investment Incentive Tax Credit is refundable. Outside the enhanced-credit areas, it equals 33% of an eligible investment, up to $250,000. It is available to investors in a qualified biotechnology company with its headquarters and base of operations in Maryland, fewer than 50 full-time employees and no more than 12 years in active business. The investment must be at least $25,000, the investor cannot own more than 25% of the company, and Maryland Commerce must issue the initial credit certificate before the money is invested. We track the recapture window, which runs two years from the close of the tax year for which the credit is claimed. Maryland Commerce Biotechnology Investment Incentive Tax Credit (BIITC).

Document research spending for Maryland's R&D credit

Maryland's research and development tax credit equals 10% of eligible Maryland research expenses above a base amount figured from the company's Maryland gross receipts and prior research spending. No applicant may receive more than $250,000, and credits are prorated when applications exceed the program's statewide caps. Companies apply to Maryland Commerce by the annual November 15 deadline, and the credit is refundable for a small business with net book value of assets under $5,000,000. We tie lab payroll, supplies and contract research to the federal definition of qualified research expenses so the Maryland application and the federal credit rest on the same records. Maryland Commerce Research and Development Tax Credit.

How we scope the work

We start with the decision or filing you need to complete, the entities and people involved, and the deadline. After reviewing the available records, we identify missing information and propose the services and deliverables. For ongoing work, we establish a close and filing calendar so bookkeeping, tax projections, and owner reporting use consistent information.

For a review or compilation request, bring the lender, grant, board, or regulatory requirement. We confirm the engagement type and applicable professional requirements before accepting the work. Audits of Maryland entities are not currently offered; KAS confirms Maryland CPA firm permit requirements before accepting such engagements. Review and compilation engagements for Maryland entities are accepted where Maryland rules allow.