DuPont investing $200M in Delware research center

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The existing DuPont Experimental Station in Wilmington, Delware will soon be renting out their newly redeveloped research space.

During remarks at a Delaware state chamber of commerce meeting, CEO Edward Breen told the room that “Our board of directors just approved a plan to spend $200 million to modernize and upgrade Experimental Station. We’re going to optimize many of our labs, we’re going to set up networked collaboration for our scientists, for our customers.”

Breen elaborated that the upgrade would help allow third-party companies to come in.

“They are going to have to be science-based companies. I’m hoping that there are some with contiguous things that DuPont is interested in. But we really want to use it as an incubation center,” he said.

DuPont’s Experimental Station has a remarkable history of innovation. Opened in 1903, the space was started to help transition DuPont from producing gunpowder and explosives to more chemicals. The research center became the birthplace of some of chemistry’s most notable achievements including Nylon, Kevlar, Mylar polyester and Neoprene — the first synthetic rubber.

The entire center includes more than 50 buildings on 250,000 square meters of space.

Typically around 2,000 scientists now work at the center. But after the $130-billion Dow-DuPont merger was announced in December 2015, the company laid off around 200 scientists at Experimental Station. The layoffs were part of a workforce reduction in Delaware that totaled 1,700 positions.

Some critics have argued that the proposed merger with Dow could be the “death of innovation” but DuPont has announced that it plans to spend $1.7 billion on R&D this year — up from $1.6 billion in 2016.

Several other companies already use space at Experimental Station including Chemours, a DuPont spinoff, and Hygenia, a life sciences company.

 

Delaware Modifies State R&D Tax Credits

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Worth approximately $7 billion annually in recent years, the research and development (R&D) has grown exceptionally since its inception. To begin with, tax credits for spending on R&D were first enacted into federal law in the U.S. in 1981. In the ensuing quarter century, many states have adopted such tax credits, often using the federal tax credit as a prototype. Even so, many state credits have different credit limitations and amounts, as well as varying sunset dates and other important provisions.

Nonetheless, the fact remains, over the past two decades R&D tax credits offered by U.S. states have become widespread and increasingly valuable to firms. The process began when Minnesota became the first state to enact an R&D tax credit in 1982, one year after the introduction of the federal R&D tax credit. Since then, the number of states offering such a credit has risen steadily. Now, Delaware has recently made revisions to their state credit to expand its use. The changes come amid Virginia’s recent amendments last month.

To elaborate, S.B. 200 has made significant amendments to Delaware’s state research and development tax credit. These modifications to the research and development credit, as well as changes made to other Delaware tax credits, were made as a result of a merger between DuPont Co. and Dow Chemical Co.

Previously in Delaware, the aggregate credit limit per fiscal year was $5 million, and no one credit was permitted to exceed 50 percent of a taxpayer’s tax liability. However, for qualified research expenses beginning Jan. 1, 2017, both limitations have been removed. In addition, the credit has become refundable.

Overall, the recent legislation in Virginia and Delaware highlight the importance of knowing the differences that make up this popular credit in each taxing jurisdiction. Undeniably, tax credits for research and development are some of the most popular credits available. For a discussion of the various state research and development tax credit, and the federal tax credit for increasing research activities, contact one of Swanson Reed’s R&D tax specialists today.