IRS issues rules for health tax credits

By MARTIN CRUTSINGER AP Economics Writer

WASHINGTON (AP) - The Internal Revenue Service is releasing new guidelines small companies can use to apply for tax credits to spur medical research.

The credit - for up to $5 million per company - will cover up to 50 percent of the cost of qualifying biomedical research. The credit is only available to businesses with fewer than 250 employees.

The IRS on Friday released the rules companies will need to follow to apply to have their research projects certified as eligible to participate in the government's Therapeutic Discovery Project Program.

The tax credit, which will be available for investments made in 2009 and 2010, was included in the new health care overhaul legislation.