308-S: Credit for Increased Research Activities – Distribution to Shareholders (2024)
Arizona · Arizona DOR · Used for tax years 2024
Arizona Form 308-S reports a shareholder’s share of an S corporation’s credit for increased research activities. It also reports the shareholder’s share of the maximum refundable portion of the credit, if applicable.
Who files this form
An S corporation must complete a 2024 Form 308-S for each shareholder except trust or estate shareholders to distribute its credit for increased research activities.
If a grantor trust is disregarded for federal income tax purposes, its ownership share is treated as owned by the grantor. The grantor may claim their share of the credit.
Shareholders use Form 308-S to complete their own Form 308-I.
What you'll need
Have these forms and details available:
- The S corporation’s name and employer identification number (EIN).
- The shareholder’s name, Social Security number (SSN), and proportionate ownership share.
- The S corporation’s Form 308, including Part 4, line 29, for the total credit and Part 5, line 35, if completing the refundable portion.
- The Arizona Commerce Authority certificate if completing Part 3.
Shareholders also need their completed Form 308-S to complete Form 308-I.
How to file
S corporation
- Complete a separate Form 308-S for each eligible shareholder.
- Include a copy of each completed Form 308-S with the S corporation’s return.
- Give each shareholder a copy of their completed form and, if Part 3 is completed, the Arizona Commerce Authority certification.
- Keep a copy of each completed form for your records.
Shareholder
- Enter Form 308-S, line 4, on Form 308-I, Part 3, line 25.
- Enter Form 308-S, line 6, on Form 308-I, Part 7, line 37c.
- If Part 3 is completed, include Form 308-S and a copy of the Arizona Commerce Authority certification with your return.
- Keep a copy of the form and certification for your records.
Common mistakes
- Continuing Part 3 without a certificate: If the S corporation has not received an Arizona Commerce Authority certificate, stop. There is no refundable portion of the credit to pass through.
- Leaving out required attachments: If Part 3 is completed, shareholders must include the completed Form 308-S and a copy of the certification with their return.
- Claiming the credit in the wrong year: If you file on a calendar-year basis but the S corporation files on a fiscal-year basis, claim the credit on your return for the year in which the corporation’s fiscal year ends.
Questions people ask
How is my share of the credit calculated?
The S corporation enters its total credit from Form 308, Part 4, line 29, on Form 308-S, line 3. It then multiplies that amount by your proportionate share on line 2(c) and enters your credit share on line 4.
Where do I report my share of the credit?
Enter the amount from Form 308-S, line 4, on your Form 308-I, Part 3, line 25.
How is my maximum refundable portion calculated?
If the S corporation has an Arizona Commerce Authority certificate, it enters the maximum refund amount from Form 308, Part 5, line 35, on Form 308-S, line 5. It multiplies that amount by your proportionate share to calculate line 6. Enter line 6 on Form 308-I, Part 7, line 37c.
Can a grantor claim a share owned through a grantor trust?
Yes. If the grantor trust is disregarded for federal income tax purposes, the ownership share is treated as owned by the grantor, who may claim their share of the credit.
What if my tax year differs from the S corporation’s tax year?
If you file on a calendar-year basis and the S corporation files on a fiscal-year basis, claim the credit on your return for the year in which the corporation’s fiscal year ends.