Innovation. The very word exudes optimism. It is a process that combines discovering an opportunity, blueprinting an idea to seize that prospect and executing that idea to achieve results. In light of this, Bloomberg has just released their report ranking the most innovative states in America. The Bloomberg US Innovation Index provides evidence of the link between education, research and innovation.

Regardless of many having mentally crowned California’s Silicon Valley or the bright lights of New York City as king. Out of the fifty states, Massachusetts actually takes the victor’s garland as the top state for innovation in 2015. Notably, Texas ranks in 15th place thereby topping New York, ‘the city who never sleeps’, by two places.  The index scores each state on a 0-100 scale across these six equally weighted metrics: research and development (R&D) intensity; productivity; high-tech density; concentration of science, technology, engineering and mathematics (STEM) employment; science and engineering degree holders; and patent activity.

In reality, the high scoring of Texas is not too surprising given the fact that Small Business Trends ranked Austin as the ‘best city to launch a startup’ in 2015. Historically, Texas has been a business-friendly state with a thriving network. During the 2008 recession, Texas was one of the few states to add jobs. As the country emerged from the recession, the Lone Star State continued to grow. To be specific, there was a 41.4 percent increase in tech-industry employment between 2001 and 2013 and Austin ranked as the top city for technology job creation on a recent Forbes list.

On the whole, the Bloomberg Innovation report highlights the effect innovation can have on the local economy. Innovation within states can create a ‘cluster’ of companies which are attracted to the strong business environment, and in turn, propel the labor market and growth. Previous research reveals that innovation leads to job creation, customarily high-skilled job creation. However, as the labor force grows there are other jobs that come with it to service the increased personnel – for example, they need haircuts, they need landscapers, and so on. Hence, innovation is not only beneficial for high-skilled workers, but the local economy at large.

In order to generate innovation in each state, R&D can substantially help businesses propel advancement in their products, processes or software. Nariman Behravesh, chief economist at IHS Inc. in Lexington, Mass., told Bloomberg that there are some tasks that state governments can do to make their states more attractive to research and development, including R&D tax credits. For instance, Texas offers businesses their own version of the R&D tax credit which helps put cash back into the business. Individuals should take advantage of any R&D tax credits available at the state and federal levels as they can claim the credits concurrently. Contact us today to talk to a specialized R&D Tax professional who will be able to answer any questions you may have.

Traditionally, we’ve been told that spending time in close contact with others means risking catching germs and getting sick. However, new research is promoting the idea that you can spread the New Year cheer, rather than the New Year flu.

Researchers based at The University of Texas at Austin, Duke University, The University of California, Berkeley and other institutions have found that being sociable may help spread “good” microbes. The researchers discovered this by observing the changes in the gut microbes and social behavior of wild chimpanzees over eight years in Gombe National Park, Tanzania. The study, published in the journal Science Advances, found that the number of bacteria species in a chimp’s GI tract increases when the chimps are more affable.

In particular, the study found that during dry season the chimps are often seen alone. However, during the wet season they forage in groups and are much more gregarious. To be specific, the study found that each chimpanzee carried roughly 20 to 25 percent more bacterial species during the abundant and social wet season than during the dry season. Moreover, the researchers identified thousands of species of bacteria thriving in the animals’ guts, many of which are also commonly found in humans, such as Olsenella and Prevotella.

Whilst we’re not suggesting you become George of the Jungle in an effort to increase your gut flora, the research could increase the medical industry’s knowledge on the gut. Nonetheless, further research is needed to see if greater diversity of gut bacteria among the chimps has disease protection abilities. Accordingly, the team aims to study the same relationship in humans. This could be particularly helpful as reduced gut microbial diversity in humans has been linked to obesity, diabetes, Crohn’s and other diseases. Hence, the study could help the scientific community better understand conditions of the bowel or why highly sociable people live longer.

Indeed, the results of research like the above can help scientists better understand the factors involved in maintaining a healthy gut microbiome. This could have a substantial influence on medical products, processes and knowledge. Likewise, research and development (R&D) undertaken by businesses can aid companies in advancing their company by filling knowledge gaps. Consequently, this can result in the creation of new products or innovative solutions to problems. In addition, if you are conducting eligible R&D activities, you may be able to claim generous tax savings back on your investment. Swanson Reed are specialist R&D tax consultants, contact us today if you would like more information on the scheme.

Like a fading dream, our memories are not static entities; over time they shift and migrate between different territories of the brain. Since, as far as I know, Hermione’s Time Turner has not yet become a reality, our past experiences remain just that – recollections. However, have you ever wondered how your brain can play back a full memory, but instead of taking the hours over which the actual experience was subsisted, cover it all in seconds?

If so, researchers from the University of Texas at Austin have discovered the mechanism that may explain this capability and could aid scientist’s better comprehend schizophrenia, Alzheimer’s disease, autism and other disorders that stem from distortions between real and fabricated experiences. This mechanism, which compresses information needed for memory retrieval, encrypts it on a brain wave frequency that’s detached from the one used for recording real-time experiences.

To expand on this, the study found that slow gamma rhythms are used to retrieve past memories, as opposed to the fast gamma rhythms that are used to encode memories about things happening in real-time. The reason stems from the fact that slow gamma rhythms have a higher storage capacity due to their longer wavelengths, which explains the “fast-forward” effect since the brain can process an increased number of data points on each wave. Hence, just like digital compression, when you replay a mental memory, these thoughts will have less of the rich detail found in the source material.

In relation to the study, which appears in the January journal Neuron, the researchers believe this investigation could explain why people with schizophrenia who are experiencing disrupted gamma rhythms have a hard time distinguishing between imagined and real experiences. Primarily, researchers plan to examine animals with neurological disorders similar to autism and Alzheimer’s in order to uncover the role, if any, that this mechanism plays and possible ways to counteract it.

Certainly, research such as the above could have a profound effect on the knowledge and treatment of neurological disorders. In companies, research is the pursuit of new knowledge, discovery, or creative activity in an area with the goal of advancing that area’s frontiers or boundaries. Moreover, in an international economic environment where innovation processes are increasingly open and decentralized, companies’ ability to innovate often depends on acquiring knowledge from research and development (R&D).  If you are conducting eligible R&D activities, you may be able to claim generous tax savings back on your investment. Swanson Reed offers professional proficiency across a range of industries and has supported many clients achieve tax cash savings under the R&D tax credit regime. Contact one of our specialist R&D Tax consultants to find out more about the scheme and if you are eligible.

The “war on coal”, as it is phrased by coal advocates and the coal industry, parallels a somewhat modern day version of Arthur Miller’s The Crucible. The target most fingers are pointing to, whilst not Salem witches in this case, is Obama’s Clean Energy Plan. Nonetheless, if there really is a war on coal, Texas is showing how to conquer it.

Indeed, traditionally coal has been recognized to be one the cheapest sources of energy. However, there is no denying the fact that coal is a non-renewable substance and remains the largest US producer of greenhouse gases. Historically, we’ve been mining the easily accessible deposits for the last 150 years and the biosphere isn’t producing any more on a time scale that is relevant to humans.

In any case, many utilities are already transitioning away from coal on an economic basis. The surge in wind and solar has pushed prices down for those technologies, and the natural gas boom has stimulated transition. In fact, the prices for wind and solar power have dropped enough to contend with fossil fuels. Solar prices, for example, have plunged 80 percent since 2009.

Texas, in particular, is well-positioned to prosper because it has an abundance of natural gas, sunshine and wind — and a competitive electricity market that rewards the most resourceful opportunities. Moreover, due to Texas’ diversified economy, the state is expected to be able to react to lower oil and gas tax revenue without radical changes.

Furthermore, Texas easily leads all states in wind power and wind generation raised 26 percent in 2015 – a notable achievement for a state that also leads the nation in oil and gas production. More wind projects are in the workings, and when the wind dies down, natural gas plants can fire up efficiently. In electricity, cleaner-burning natural gas plants are replacing coal faster than in the rest of the nation. Solar, a relatively small part of the energy portfolio, is projected to grow sixfold this year. By 2030, solar is expected to add more generation than wind and natural gas combined.

In addition, environmental concerns are often top of mind for young people, and the issues are also important to many consumers in Europe, Asia and the U.S. Thus, companies must be responsive, especially those with international operations. In general, market competition, the deregulation of the electricity market, innovation and a heavy dose of government have accelerated the transition to cleaner fuels without slowing the economy.  Thus, if the energy future means more wind, solar and efficiency – no state has more favor.

Consequently, there is no denying that shifts in global developments, such as clean energy, are fuelling innovation across sectors.  As the above reveals, Texas is a unique energy market that has the ability to take great strides in innovation.  If your company is operating in the energy field and you have conducted research and development (R&D) activities to create innovative solutions or incentives, you may be eligible for the government’s R&D Tax Credit scheme. Contact our qualified R&D Tax Specialists today to find out if you are suitable to apply for the tax savings.

Perhaps your ‘Dry January’ disintegrated on day five or your resolve to eat healthy collapsed with a hoovering of the Christmas cheese (so you can finally start eating healthily, of course). Certainly, we have officially started the second full week of the New Year and the promises you made in the last few minutes of the previous year may have started to dwindle. However, when it comes to businesses, the New Year period can serve as the perfect motivator for those looking to expand their business operations. Research and Development (R&D), in particular, can assist firms in cultivating cash flow and innovation by developing or improving products, processes or software.

Most notably, there is one policy that has allowed for the expedition of innovation in the United States, and that is the R&D tax credit. Up until last month, the federal R&D tax credit was always temporary and was retroactively extended year after year. In December 2015, the federal R&D tax credit was made permanent by The Protecting Americans from Tax Hikes Act of 2015 (“PATH” Act).

Apart from instilling confidence in US businesses to invest in R&D, the PATH Act included two new provisions that will make it easier for startups and small and medium-sized businesses to immediately benefit from the R&D tax credit. Starting in 2016, suitable startups with less than $5 million in gross receipts will now be capable of using their R&D tax credit (capped at up to $250,000) to offset payroll taxes, producing instantaneous value.

The second key provision of the PATH Act eradicates one of the major restrictions that had prevented many small and medium-sized businesses from seizing the credit in the past. The PATH Act will now permit eligible businesses with $50 million and less in gross receipts (based on a three-year average) to apply the R&D tax credit against the Alternative Minimum Tax (AMT). This is an enormous update for shareholders of eligible pass-through entities (e.g., S corporations and partnerships) who have an AMT liability.

Undeniably, a common misbelief surrounding the R&D tax credit is that only large corporations qualify and that it’s too complex to apply for. Nonetheless, with the two major barriers discoursed above alleviated or eradicated completely, startups and small and medium-sized companies now have an unparalleled chance to profit from this lucrative credit –although they need to start planning as soon as possible. With the New Year now upon us and given these changes to the credit, now is the time to invest in R&D and reap the benefits of this opportunity this current year.  A tax professional, such as Swanson Reed, with R&D tax credit expertise can assist businesses with qualifying for and claiming the credit. Contact us today to find out if your startup or small and medium-sized company can benefit from the improved permanent R&D tax credit.

Not sure of the benefits of R&D? Check out our previous blogs: How the R&D Tax Credit Permanent Boost the U.S. Gross Domestic Product (GDP), and Don’t Hold Back Your Claim: 7 Common Myths about the R&D Tax Credit.

For those of you on a post-Christmas, New Year health kick, giving up your daily brew as part of the traditional detox may not be prescribed this year. With more than half of Americans drinking coffee on a daily basis, the beverage is the most widely consumed stimulant and reports show it can boost daily energy expenditure by approximately five per cent. However, most recently new research from the University of Texas reveals that coffee drinkers may in fact have greater protection against the grim reaper.

In specific, those who consume four to five cups a day had the lowest risk of early death from a whole host of causes – including diabetes, heart disease, respiratory diseases, influenza and even suicide. The study found that those who drank decaffeinated or consumed coffee additives had a lower risk of death too.

The study, which was undertaken by the University of Texas, dissected data from a previous study that spanned 10 years. From 1998 through to 2009, 90,317 adults without cancer or history of cardiovascular disease were observed. They had reported their coffee consumption, along with other dietary and health details, at the beginning of the study.

By 2009, about 8,700 people had died. After accounting for further influences, like smoking, the researchers established that coffee drinkers were less likely to have died during the study than non-drinkers. In fact, people who consumed two to three cups of coffee per day had around an 18% lower risk of death during follow-up when paralleled to those who drank no coffee. The study also discovered that drinking up to five cups per day, or 400 mg of caffeine per day, was not linked with any long-term health risks.

Similarly, another study conducted last year revealed a 20 percent reduced risk of melanoma in those who drank four cups of coffee a day. Likewise, another study revealed that heavy coffee drinkers are more likely to survive colon cancer than those who do not drink coffee.

In light of the study, the Texas research team believes the dark brew could reduce someone’s risk of death by “favourably affecting inflammation, lung function, insulin sensitivity and depression.” Hence, thanks ‘a latte’ to the power of research, giving up coffee this year doesn’t have to make the obligatory appearance on 2016’s  resolution list.

However, one resolution worth noting this year is the continued investment in research and innovation.  Did you know that if you are conducting research you could be eligible for tax benefits? The government encourages businesses within the U.S. to do this by allowing business owners to offset research and development with R&D Tax Credits. Moreover, businesses can take advantage of both state and federal credits and can claim the credits concurrently.  Contact us today to see if you are eligible to claim the R&D Tax Credit.

In the lead up to Christmas joy is often sensed around the nation in the form of Christmas carols, gift giving, and of course, obligatory ‘taste testing’ of gingerbread men. However, this holiday season thanks to congress, joy was also felt by tax payers.  On December 18^th 2015, the US congress provided the ultimate holiday tax gift in the form of the permanent tax breaks. Most notably, for the first time in history, the federal R&D tax credit was made permanent. Thus, prompting the question, how does a permanent R&D Tax Credit impact the nation?

To begin with, a permanent R&D tax credit allows US businesses to confidently invest in research and development without having to worry about whether Congress will extend the credit. Previously, the on-again, off-again nature of the credit influenced future R&D budgets, planning and investment decisions.  Now, businesses may self-assuredly invest in an R&D project without fear of being audited.

Without a doubt, R&D plays a critical role in the economic growth of a country, essentially spurring the innovation and increased productivity necessary for a strong U.S. economy.  Moreover, when R&D is undertaken in the United States, domestic jobs of workers performing research activities are maintained and increased. For every large company performing R&D in the United States, there are many small and medium-sized manufacturers in the supply chain who have employees performing R&D used by their larger customers. In fact, 70 percent of credit dollars are used to pay salaries of high-skilled R&D workers. Furthermore, a recent study on tax reform finds that a strengthened, permanent R&D incentive would increase employment by over 36,000 jobs per year and contribute to annual increases in GDP and investment.

Indeed, a permanent R&D tax credit fuels innovation which translates into new product development, job creation and increased productivity—three key factors necessary for growth in a global environment. Hence, as the R&D tax credit becomes permanent legislation, businesses around the nation should be taking advantage of the benefits of R&D. Moreover, aside from permanency, the PATH Act includes that certain companies—startups that are less than five years old with less than $5 million in annual revenue—will now be able to apply up to $250,000 in R&D expenses against their payroll tax liability. Consequently, expanding the reach of the R&D Tax Credit to smaller companies.

Overall, Swanson Reed believes the permanent R&D tax credit will advantage our clients by providing a reliable funding source. Contact us today if you would like to learn more about the R&D Tax Credit. In the meantime, and in light of the permanent credit, we would like to wish everyone a happy holidays!

Certainty, no metaphorical ‘lumps of coal’ were found in any Christmas stockings from Congress this year. Instead, Congress wholly embraced the holiday season by providing taxpayers with a gift in the form of tax extenders. Hence, has the annual uncertainty and ritual of tax extenders become the Ghost of Christmas past?

Like clockwork, Congress votes on prolonging a set of temporary tax provisions every year or two. Tax extenders, as they are collectively known, are often renewed at the very last minute, providing uncertainty to businesses around the nation.

However, as we mentioned in our post yesterday, the Protecting Americans from Tax Hikes (PATH) Act of 2015 was signed into law on the 18^th December 2015 by President Obama. The package of tax extenders will cost $622 billion over the next decade and permanently extends many popular business and individual incentives.

Undeniably, the Path Act has provided long-term certainty for many incentives. In fact, this year, 52 tax provisions that have expired have either been temporarily extended or made permanent. Almost two dozen are made permanent, including the important R&D Tax Credit.  Since the announcement of the Path Act, advocators have heralded the tax extenders legislation as a stride towards a tax reform.

Traditionally, making extenders permanent is seen as step one for fundamental tax reform because it allows a more accurate revenue target when forecasting feedbacks from changes to the tax code. According to Mark Bloomfield, president and CEO of the American Council for Capital Formation, the permanent tax legislation released last week could bear the possibility of a tax reform. Bloomfield writes that the settlements in the Path Act could be the road map in 2017 for the first 100 days of the new president. Expanding on this, Bloomfield notes that in the first 100 days the new president has his maximum political capital and Congress is inclined to follow presidential leadership.

Nonetheless, whether or not making the tax extenders permanent will fuel a tax reform is yet to be known. However, the bottom line is that the Path Act is essentially good for taxpayers and businesses, as it allows them to plan their activities with increased certainty. Moreover, Swanson Reed welcomes the permanency of the R&D Tax Credit which is vital to our clients. To discuss the credit further, please contact one of our specialist R&D Tax consultants.