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Arizona Implements University R&D Tax Credit Program

As interests in emerging technologies and innovations continue to grow in today’s world, research and development efforts have also accelerated. In an attempt to encourage these efforts, the University R&D Tax Credit Program provides states with an opportunity to qualify for an additional non-refundable income tax credit when conducting research through specific universities within that area. Not only does this give faculty and graduate students the incentive to take on new research projects, but also provides an opportunity for companies to contract with these universities to conduct R&D, giving them complex yet practical research problems while providing the financial support to study them.

Recently, the state of Arizona has taken on the University R&D Tax Credit Program to maximize their research efforts in all capacities. The universities that are currently under the jurisdiction of the Arizona Board of Regents allowing them to receive the benefits of this program are Arizona State University, Northern Arizona University and the University of Arizona. One or more of the three universities listed above have access to this tax credit provided their research efforts qualify for the program. Currently, the credit is equal to 10% of any excess “basic research payments” made by a taxpayer in a taxable year in conjunction with the taxpayer’s “qualified organization base period amount” for the same taxable year.

To put the adoption of the University R&D Tax Credit Program into perspective, the current general R&D tax credit in a taxable year is equivalent to 24% of the first $2.5 million of qualified research expenses, with a threshold of 15% on expenses greater than that amount. Under the current law, the University R&D tax credit combined with the general Arizona R&D tax credit has a potential to increase the total R&D tax credit for qualifying research expenses by a whopping 19%. There is a cap, however, on the program’s certifications for one calendar year at $10 million. Once the certification cap is met, no further research payments will be certified by the ACA (Arizona Commerce Authority). Like many other limited enrollment programs, the ACA will approve applications on a first come, first serve basis.

Overall, the University R&D Tax Credit Program provides states with a greater incentive to engage in research that allows for new discoveries and advancements without feeling restricted by research expenses. Arizona is actively taking advantage of this program and will reap the benefits with more money in their pockets as well as an increase in research opportunities.

More about Arizona’s University R&D Tax Program application process can be found here: https://www.azdor.gov/TaxCredits/UniversityResearchDevelopmentTaxCredit.aspx

Talk with a Swanson Reed representative today if you would like to know more about how the University R&D Tax Credit works and if your university eligible.

A Case for a Prospective Therapeutic Method for Brain Swelling During Concussions

Concussions are traumatic brain injuries that change the way a brain performs. More often than not, concussions are caused by a blow to the head or violent shaking to the head or upper body region. The devastating condition is commonly caused by contact sports- such as football, car accidents, falls, and assaults. Centers for Disease Control and Prevention reports a startling average of deaths and lasting disabilities due to traumatic brain injuries every year in the United States.

One of the leading causes to the significantly high death rate in patients who experience a mild concussion is the edema of astrocytes, or swelling. Astrocytes are cells that tile the entire central nervous system. Astrocytes are the most profuse cell type in the brain, outnumbering neurons 5:1.

The swelling of the brain during a concussion can vastly increase the asperity of the injury. Fortunately, biomedical engineering researchers at the University of Arkansas have discovered an FDA-approved drug- Acetazolamide, that is commonly used for altitude sickness and epilepsy, to be the therapeutic solution. Preliminary treatment to the cells with the Acetazolamide has proven to reduce the pronouncement of a specified protein, aquaporin-4, that generates swelling.

A recent issue of Nature’s Scientific Reports published the researchers’ uncovering of the therapeutic treatment.

“Our study found that mild traumatic brain injury resulted in increased expression of a protein called aquaporin-4, which caused a massive cellular influx of fluid, leading to increased astrocyte cell volume and injury,” said Kartik Balachandran, assistant professor of biomedical engineering. “We then worked with a drug called Acetazolamide. Our results showed that Acetazolamide minimized cell swelling and injury, suggesting a therapeutic role for this drug in reducing the detrimental effects of concussions.”

Nasya Sturdivant, a doctoral candidate; Jeffrey Wolchok, a biomedical engineering assistant professor; and FDA’s National Center for Toxicological Research conducted research along with Balachandran.

The researchers’ collaboration has led to a possible therapeutic advancement along with a creation of a benchtop bioreactor. In order to examine astrocyte cells, the researchers engineered a benchtop bioreactor. The device led the researchers to uncover that mild traumatic brain injuries lead to an assertion of aquaporin-4. Aquaporin-4 is a protein that leads to a vast influx of fluid. The assertion of aquaporin-4 causes an increased astrocyte cell volume.

The researchers’ collaborative efforts are an encouraging indication that there is a case for therapeutic options for brain swelling during concussions.

The National Science Foundation funded the research.

Does your company conduct R&D? Contact us to find out if you qualify for the R&D tax credit.

Florida Revamps State R&D Tax Credit Process

Since the first federal legislation enacting research and development (R&D) tax credits in 1981, many U.S. states have begun taking advantage of the copious benefits afforded by a tax credit program. Although Florida first began an R&D tax credit program in 2013, the state’s unorthodox system of processing applicants, coupled with a comparatively low cap on credits, has left some taxpayers longing for change. Now the program has been significantly revised.

Prior to 2016, claimants applied for the tax credit beginning on March 20 of the given year at 8:00 a.m. local time. Applications were processed in the order they were submitted, leading to the inaugural year’s entire allocation of credits being distributed in around six hours. Two years later, the program granted all tax credits in under six minutes with only a fraction of those eligible receiving any credits. As such, Florida has deemed these issues as necessitating a great deal of change to the R&D tax credit program. Perhaps most significantly, the total credit cap has been raised from $9 million to $23 million, allowing a greater number of qualified applicants to receive credits.

These changes carry significant ramifications for those planning to apply in 2016. In order to take advantage of the new benefits offered by Florida’s revamped R&D tax credit system, applicants should pay close attention to certain factors and deadlines. Firstly, taxpayers must request a letter from the Department of Economic Opportunity certifying that the applicant is an eligible target industry business. This includes those businesses in the manufacturing, biological and marine sciences, general and cloud information technology, aviation and aerospace, homeland security and defense, and nanotechnology industries. Secondly, the application period has been extended to seven days, spanning March 20 to March 26. Finally, understand that while the total credit cap has been raised from $9 million to $23 million, if the total amount of credits for all applicants exceeds the new $23 million cap, the credits will be distributed on a prorated basis.

Credit availability is subject to legislative changes. Swanson Reed’s R&D tax professionals are available to discuss the R&D tax credit – contact us today if you would like to know if your company qualifies.

Johns Hopkins University Leads in R&D Spending

Schools like Alabama University and Ohio State may be winning it on the football field this year, but Johns Hopkins University is playing a different kind of game and they’re not just winning, they’re crushing it! Johns Hopkins was once again ranked first in research and development spending this year for the 37th consecutive time according to the National Science Foundation, and by the looks of it, it doesn’t seem like they’ll be dethroned anytime soon.

What does it take to be number one? The NSF reported Johns Hopkins allocating a whopping $2.306 billion towards R&D projects this year, primarily in the science and engineering space, resulting in a 2.8 percent increase from the previous year. To put that into some perspective the University of Michigan, ranked second in total R&D spend, only came in at $1.369 billion spending; that’s nearly an $800 million difference from the R&D leader.

$1.995 billion of Johns Hopkins research expenditures were paid through federal agencies. Since 2011, the federal government has been decreasing overall university R&D funding by an estimated 7.1 percent. Despite the decline, the NSF showed Johns Hopkins actually receiving a 2.2 percent increase from the previous year marking them as the top federal backed university in the U.S.

This increase isn’t surprising when accounting for the major return on investments seen consecutively throughout the years. When it comes to making breakthroughs, Johns Hopkins is a machine. In 2015, they produced 112 new patents which has since then increased to upwards of a 153. Through licensing of these patents, Johns Hopkins is raking in some big numbers. In fact, in October of 2015, Immunomic Therapeutics signed a $300 million licensing agreement resulting in the largest deal to ever come out of the university.

It’s clear that Johns Hopkins R&D initiatives are carrying momentum and will continue to do so by heavy federal backing. Their investment in this space is even better complimented by the support given from the Research and Development (R&D) tax credit. By taking advantage of said opportunities, Johns Hopkins University will continue to inspire greater innovation and pave the way for advancement in its respected fields.

If you would like to discuss the R&D Tax Incentive further, please do not hesitate to contact one of Swanson Reed’s offices today.

Innovation District Proposal for New Increment Financing

As part of an ongoing discussion to create an innovation district near Oklahoma City, proposals have been made to create a new tax increment financing district. This proposed district would be located east of Interstate 235 between NE 13 and NE4, and would be composed of two smaller sub-districts. The Chaparral apartments, which are a section 8 public housing project, would be included in these sub-districts.

The presentation of the proposal of this new district to the Oklahoma City Council overlapped with an announcement from a representative of the Brookings Institution. This institution is in coordination with the Project for Public Spaces on how to create opportunity for new talent and potential investments within the group of research organizations, bio-tech and technology firms, and hospitals located east of downtown. The proposed location – interchangeably known as the Oklahoma Health Center, the OU medical Center, or the Health Sciences Center – currently employs 17,900 throughout its 823 acres.

Cathy O’Connor, president of the Alliance for economic Development of Oklahoma City, informed the city council about “how can we better advance high tech, companies and entrepreneurship in Oklahoma City” and the ways in which the existing TIF district helped fund infrastructure as part of the GE Global Oil and Gas Research Center.

Financially speaking, the budget for the proposed TIF district would start around $52 million, and would be allocated as follows: $18 million for enhanced education, $17 million towards commercialization of research and technology, $9 million for place-making, $5 million for supporting development, and $3 million for implementation. Specific goals for this project, according to O’Connor, will include working with Oklahoma City Public Schools and Metro Technology Centers to endorse new training and chances for education around the community.

Although the vote for this proposal is not due until December 20th, responses from city council members were in agreement about the importance of creating a competitive advantage in the innovation district. Councilman David Greenwell stated that “cities are becoming more competitive day by day” and that in order to keep up, they must join other cities in “investing large amounts of money in tech to make [the city] more livable.” Councilman Ed Shadid agreed, and emphasized that the Biotech industry was “not going anywhere” and was a “smart investment to make.”

Consultants for the innovation district suggest something called Automobile Alley, which includes restaurants, stores, housing, and mixed-use developments that are currently unavailable east of the interstate. On the topic of economic and racial inequalities with the nearby east-side neighborhoods, Jennifer Vey with the Brookings Institution noted the number of well-paying jobs that require associates degrees within the area. She said that these jobs could provide new opportunities to the lesser-off neighboring areas. These bar for these jobs “isn’t very high,” according to Vey.

Discussions of attempts to diversify the district have been reported by David Harlow, president of BancFirst, and Stephen Prescott, president of the Oklahoma Medical Research Foundation. These discussions suggest inclusion of the aerospace industry, and OU’s energy research facility, as well as others.

Interested in claiming the R&D Tax Credit? Contact us here.

Georgia R&D Tax Credit Considered Most Taxpayer Friendly

Inception and Benefits

The R&D credit was introduced in 1981, which implemented many promising incentives for companies making R&D investment plans. However, with the government letting it expire 16 times over the last 35 years, it essentially became an unreliable source for companies depending on the tax credits. Congress finally decided to make it permanent in 2015 and included a couple positive incentives:

Start-up Companies:

with less than $5 million in gross receipts
in their first 5 years of business

Incentive:

can offset the employer portion of FICA payroll tax (up to 250,000 each year)

Small Companies:

with less than $50 million in average gross receipts

Incentive:

can offset Alternative Minimum Tax

State R&D Credits

There are multiple states that have R&D tax credits, many of which may be more valuable than the federal R&D tax credit. Numerous companies often overlook their state R&D credit, not realizing how beneficial these may be. That being said, the Georgia R&D credit can be up to 10 percent of qualifying expenses, which may be a better benefit than the federal credit for some taxpayers. For those companies that don’t have any Georgia income tax liability, they may utilize the credit against Georgia payroll tax withholding. That could potentially be a significant sum of money the company can put back into their business.

Qualifying Activities and How to Take Advantage

Did you know that there are many activities that can qualify manufacturing companies for the R&D tax credit, including:

Activities to create new product offerings
Enhancing the performance, reliability, or quality of existing products
Creating new or improving existing manufacturing processes

It is a great time for businesses to take advantage of this profitable incentive. In order to obtain the R&D tax claim, it is essential to have all proper documentation, including research activities and costs incurred. Along with the proper documentation, it is imperative to have a reputable company by your side. With extensive knowledge of federal and state R&D credits, Swanson Reed is committed to helping our clients in all aspects of the R&D tax process. We will gladly be of service to you in any way possible.

R&D Investments in Indiana Prove to be Rewarding

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There is some good news for the Crossroads of America. Ball State University’s Center for Business and Economic Research (CBER) says that federal and state technology based research and development efforts have been beneficial to Indiana’s economy.

Studies That Show Results

The first study performed by the CBER analyzed activity from 2010 through 2014. During the span of these four years, $27 million was granted to 74 Indianan organizations through a variety of well-known programs. The results indicate that investments contributed to the creation of 323 jobs, an $18 million growth in GDP, and $16 million rise in personal income.

The second study examined firms that were either awarded or rejected assistance by the 21st Century Fund. Results indicate that average annual wages, sales, and productivity all increased for those who received support. As a result, it was recommended to continue the program through 2020.

Overall Positive Impact

Hoosier tech companies have seen a “significant positive impact” according to CBER Research Assistant Professor, Srikant Devaraj. He goes onto add, “More importantly, these organizations are leveraging the funds they receive from Indiana to acquire loans and investments from banks and other venture capitalists. Receiving a grant from one of the funds is seen as a stamp of approval by outside groups. This certainly helps these companies expand.”

Indiana’s Marion and Hamilton Counties received approximately 75% of the total funding from various sources such as Indiana’s 21st Century Research and Technology Fund, the Indiana Angel Network and Indianan High-Growth Fund, and the Small Business Innovation Research and Small Business Technology Transfer programs. Furthermore, they received aid from the U.S. Department of Energy’s Office of Science.

Overall, a rise in job totals, GDP, and personal income levels prove that Indiana has benefited from the boost in technology-related R&D.

To discuss all the facets of the research and development tax claim process, contact one of Swanson Reed’s R&D tax specialists today.

Brazil launches first stage of solar power floating demo

On March 4, Brazil’s Balbina hydropower plant began operating a floating solar power plant. It is one of two systems in a research and development (R&D) project that aims produce up to 10 Mega Watt peak (MWp) of power. The floating PV panels on reservoirs are designed to generate power which is complimentary to hydro power and takes advantage of idle space in substations and transmission lines of hydro plants.

The Brazilian government will switch on its second plant, the Sobradinho hydropower plant on March 11. The floating photovoltaic (PV) arrays aim to deliver 1 MWp each at the first stage of the project. Solar PV power systems are designed to convert and supply solar power into usable energy by means of photovoltaics.

If the implemented systems at both sites are proven successful as sources of renewable energy for Brazil, the government will add a further 4 MWp per site by October 2017. The R&D project will end with the presentation of the results in January 2019, according to the Ministry of Mines and Energy.

Brazilian power utilities Eletronorte and Chesf will invest BRL 100 million (USD 26.8m) in total in the R&D project. Balbina and Sobradinho were chosen due to their location in areas with different climatic regimes, thus performance of the floating PV systems will be analysed in various weather conditions.

Similar research projects have been undertaken in other countries, but not at HPP’s, noted the government.

Austria R&D spending increasing but reform agenda not working

Industry and exporters in Austria are concerned with their futures as productivity growth weakens, and costs are rising quickly. Lack of confidence in the industry depressed investment and has kept economic growth at a very slow rate. Despite these industry fears, the government has made positive changes to tax incentives which has meant Austria has seen R&D spending increasing nationally.

Austrian business believes the governments have not acted to account for the seriousness of the problems facing business, potentially threatening the foundations on which Austrian postwar prosperity was built.

The government has helped by improving the incentives for R&D, in particular by raising the amount of cash or tax credit given to companies from 10 per cent to 12 per cent of the money invested. Austria has raised its R&D spending to 3 per cent of GDP, the fifth highest in Europe, says Mr Aiginger, and even the ambitious target of 3.76 per cent of GDP by 2020 is not out of reach if more private funding can be raised.

Austria also needs new innovative companies. “Regulation and lack of start-up capital inhibit entry of innovative new firms, undermining economic dynamism,” says the OECD survey.