General Business Credit

The following paragraphs explain the changes to the general business credit.

Research credit. The research credit was scheduled to expire for expenses paid or incurred after June 30, 1998. It has been extended for expenses paid or incurred before July 1, 1999.

Work opportunity credit. The work opportunity credit was scheduled to expire for wages paid to individuals who began working for you after June 30, 1998. It has been extended for wages paid to individuals who begin work for you before July 1, 1999.

Welfare-to-work credit. The welfare-to-work credit is a new credit employers can take for qualified wages they pay to qualified long-term family assistance recipients who begin work after December 31, 1997, and before July 1, 1999.

In the first year of employment, the credit is 35% of the first $10,000 of qualified wages paid to that employee. In the second year, the credit is 50% of the first $10,000 of qualified wages.

For more information about this credit, see chapter 4 in Publication 334, Tax Guide for Small Business, or Form 8861, Welfare-to-Work Credit.

Carryback and carryforward of unused credit. The years to which you can carry back and carry forward the unused credit have changed. You must carry the unused credit back to the first tax year before the year the credit arises. Carry any unused credit forward to each of the 20 years after the year the credit arises until you have taken the full amount of the credit. This change applies to credits arising in tax years beginning after 1997. For more information about the carryback and carryforward of unused credits, see the instructions for Form 3800, General Business Credit.

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