Conn. Gen. Stat. § 12-217j: Tax credit for research and experimental expenditures.

(a)(1) There shall be allowed as a credit against the tax imposed on any taxpayer under this chapter, with respect to income years of such taxpayer commencing on or after January 1, 1994, an amount equal to twenty per cent of the amount spent by such taxpayer directly on research and experimental expenditures, as defined in Section 174 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, which are conducted in this state and which exceeds the amount spent by such taxpayer during the preceding income year of such taxpayer for such expenditures.

(2) As used in this section, “taxpayer” means (A) a taxpayer, as defined in section 12-213, and (B) a single member limited liability company that (i) has more than three thousand employees in this state, and (ii) is engaged in manufacturing, with expertise in mechatronics, alignment and sensor technology and optical fabrication. For purposes of this section, if a single member limited liability company is disregarded as an entity separate from its owner for federal income tax purposes, the calculation of the total number of employees in this state of the limited liability company shall include both the employees of the limited liability company and the employees of such limited liability company's owner.

(b) (1) With respect to any income year commencing on or after January 1, 2000, a credit or any portion of a credit that is allowed under this section but that is not used by a taxpayer because the amount of the credit exceeds the tax due and owing by the taxpayer shall be carried forward to each of the successive income years until such credit, or applicable portion of the credit, is fully taken. In no case shall a credit, or any portion of a credit, that is not used by a taxpayer be carried forward for a period of more than fifteen years.

(2) (A) With respect to any income year commencing on or after January 1, 1997, and prior to January 1, 2000, a credit or any portion of a credit that is allowed under this section but that is not used by a biotechnology company because the amount of the credit exceeds the tax due and owing by the taxpayer shall be carried forward to each of the successive income years until such credit, or applicable portion of the credit, is fully taken. In no case shall a credit, or any portion of a credit, that is not used by a biotechnology company be carried forward for a period of more than fifteen years.

(B) For purposes of this subsection, “biotechnology company” means a company engaged in the business of applying technologies, such as recombinant DNA techniques, biochemistry, molecular and cellular biology, genetics and genetic engineering, biological cell fusion techniques, and new bioprocesses, using living organisms, or parts of organisms, to produce or modify products, to improve plants or animals, to develop microorganisms for specific uses, to identify targets for small molecule pharmaceutical development, or to transform biological systems into useful processes and products.

(3) If the taxpayer that pays or incurs research and experimental expenditures is a single member limited liability company that is disregarded as an entity separate from its owner, the credit may be claimed by such limited liability company's owner, provided such owner is subject to the tax imposed under this chapter.