Are you a New Jersey High-Tech Company with NOL’s and R&D Credits?
So, you are development stage life science company located in New Jersey and, like the rest of us, in need of cash. Your accountant tries to sell you a federal research and development tax credit study. Your response is, “Why? I don’t have any revenue and thus pay no taxes – get lost!” While that may be the appropriate response from a federal perspective, that may not be the correct answer from the state of New Jersey’s perspective.
In 1999, New Jersey commenced a program that allows certain development stage companies (emerging technology or biotech companies) to actually sell their unused net operating losses (“NOLS”) and research and development tax credits for cash – generally to the tune of 90 cents on the dollar. So, if you have unused New Jersey R&D credits of $100,000, you may be able to sell those credits for $90,000! The buyer is generally another New Jersey company in need of credits and NOLS.
As with any other program, when dealing with the Federal or State government you need to jump through some hoops and fill out some paperwork. But, all in all, the process is not that painful.
So, if you are sitting on some unused credits and NOLS or youbelieve you may have some that you have not yet captured, it is probably worthwhile to taking a look to see if you are sitting on some cash.
