Research and Development Tax Credit Opportunity- 3D Printing With Foam

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3D printers have come a long way and offer benefits that traditional manufacturers can’t. Companies have been exploring the potential of 3D printers, leading to research and development (R&D) tax credit opportunities.

3D printing gives industries the ability to manufacture custom products at a low cost. Material scientists at the Lawrence Livermore National Laboratory have researched 3D printing with foam materials, finding printed products work better than mass manufactured ones in terms of durability and performance. R&D tax credits are available to all industries investigating new technologies, such as 3D printed products.  For example automotive companies using 3D printed foam to create prototypes would be eligible to claim.

NASA has expressed an interest in the use of 3D printed foam, offering $100,00 to the University of West Virginia to research the material. The R&D Tax Credit is even more beneficial in this case, federal returns allow an additional 20% credit when research and development is conducted through a university.

If your company is experimenting with new products or technologies please contact a Swanson Reed R&D Tax Advisor today, so we can help maximize your claim.

3D Printing Could Transform the Eyewear Industry

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Need a new pair of glasses? 3D printed glasses are a new phenomenon, which have many advantages over traditional glasses. For starters, they will allow eyewear companies to improve their business performance while decreasing manufacturing costs and waste.

As glasses are worn on the face and are seen instantly, customization is important for wearers. 3D printers can print many versions and designs without having to consider production volume-to-cost ratios. Printing costs for one pair of glasses are the same per pair as producing thousands. Therefore, each pair can be unique and additionally, the availability of a specific frame is increased.

Unlike expensive custom glasses, 3D printed eyewear does not require a mold and any errors can be easily corrected. The glasses are completely bespoke using a one-off production process. Customers can choose the style, colour and size. Production methods like laser sintering or lost wax metal casting ensure optimal finish. They can be precisely fitted to the wearer’s face in terms of size and dimensions, so it is no longer a one-size-fits-all approach. Furthermore, glasses can be printed on-site, rather than having to import from China, eliminating transportation costs and significantly reducing waiting times.

In terms of vision, traditional glasses require the lenses to be placed into the chosen frame, which can result in suboptimal lens performance from its impact on lens alignment. 3D printed glasses build the frame around the lenses, providing the best possible visual performance.

3D printing has the potential to completely transform the eyewear business. It has happened in other industries; the manufacture of 3D-printed hearing aids grew from 20 percent to almost 100 percent within two years.

Currently, drawbacks include strength and variety but these are continually being improved. Companies who are developing 3D printed eyewear can now apply for research and development tax credits. Qualified costs may include wages, supplies, research, testing and expenditure incurred for patent development. To check your eligibility for R&D tax credits, use our online eligibility test. Alternatively, contact us directly for further information.

Increase in R&D Activities Prove to Aid in Automotive Lithium Ion Battery Market

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The automotive lithium ion battery market is showing steady growth, thanks in part to an increase in research and development (R&D) funds provided by the R&D Tax Credit.

Many countries are trying to lower their dependency on gas and diesel for transportation, and focus more on sustainable fuels. This has been driving companies to look to alternative sources of energy. However, until recently there has been little advance in battery technology due to high production costs and a limited availability of the rare materials required. But with the rise in popularity of electric cars, the global lithium ion battery market is expected to increase rapidly; and R&D credits are fueling their development.

Along with R&D tax credits, there are a number of other incentives that the government is providing for this sector. The Internal Revenue Service (IRS) are giving tax credits of $2,500-$7,000 per electric vehicle purchased in the United States. with some states also providing rebates (e.g. $2,500 in California, $1,000 in Delaware and $5,000 in Colorado) towards the purchase of an electric vehicle.

These government incentives and the growing consumer desire to use clean fuels will continue to drive the demand for electric vehicles; and subsequently the demand for improved lithium ion batteries. R&D credits will prove invaluable in helping companies overcome the high cost of developing and improving new battery technologies.

Although the electric car market is still in its infancy, the projected future looks very promising, thanks in part to R&D Tax Credits. If you would like to find out how your company could benefit from R&D Tax Credits, contact a Swanson Reed R&D Tax Advisor today for an assessment.

Digital Marketing Companies Are Missing Out on R&D Tax Credits

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While research and development activities are generally equated with technical industries, you may be surprised to learn that traditionally non-technical industries may be eligible for R&D tax credits. Digital marketing and media agencies, advertisers and publishers must invest in research and development to survive in a dynamic and ever-increasing competitive environment. 

Software development has become the norm for these industries, who have seen a shift from traditional to digital media. While Google and Facebook are the largest players in programmatic marketing technology, companies of all sizes are investing in marketing R&D and hiring teams of technical staff like software developers, data engineers and marketing statisticians. Furthermore, user experience design and strong search engine optimization are now critical to gaining an edge over the competition.

Today, firms are focusing on marketing that relies on numbers and science, rather than vague estimates. Clients continually want better metrics and performance, creating a need for programs that gather and analyse data. Companies making innovative technical improvements to web technology, software development or data analysis may be eligible for R&D tax credits. As well as the front end development required for firms providing business statistics to their clients, APIs often need to be developed in order to provide real-time data metrics. Other qualifying activities include developing algorithms for advertising campaigns, developing or integrating CRM software and coding new features to tackle difficult business challenges. 

Keep in mind that work in the arts, humanities and social sciences is not eligible as research and development. Research must be technical or scientific in nature. For instance, graphic design and copywriting are not eligible.

R&D tax credits generally equal 15 percent or more of eligible expenditure. Qualified activities must meeting four criteria.

Activities must:

  • Be intended to improve or develop the performance, functionality or quality of a product, technology or service.
  • Involve experimentation.
  • Be technological or scientific in nature.
  • Attempt to eliminate an uncertainty.

See whether you could be eligible for the R&D Tax Credit by taking our online eligibility test. If you have any questions, please don’t hesitate to contact our office.

R&D Tax Credit Boosts Growing Material Handling Industry

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The demand for material handling and logistics industry has had a continued upward trend in today’s global world. The need for global supply chains and distribution of goods through advanced technology has employed over 700,000 in the material handling market, according to recent figures, and consumption greater than $156 billion in the U.S. In 2013, business logistics accounted for 8% of the U.S.’s GDP. This growth could accelerate with the Research and Development (R&D) Tax Credit. With recent legislative changes, the credit can now be claimed by more businesses and includes more eligible supply costs; a change that may increase a business’ claim by up to ten times.

What qualifies as “research and development” for credit eligibility? There are a number of qualifying activities, including developing material handling systems, designing robotic systems, manufacturing motor systems, or developing overhead material handling solutions, to name a few. The R&D Tax Credit is permanent and many states also have a similar credit which can be added to the federal claim.

Previously, small and medium businesses were often ineligible to claim the R&D tax credit due to the alternative minimum tax (AMT). At the start of the 2016 tax year, the AMT barrier was removed allowing all businesses to benefit from the incentive. Other regulatory and legislative changes have expanded the credit further, allowing companies to be rewarded for innovative solutions such as solving a technical problem on a factory floor or improving a distribution process.

Design improvements through automated systems and innovative technologies can pay off for companies who take advantage of the R&D tax credit. A material handling company which improved designs to an existing industrial system received $596,000 through federal and state R&D credits. These incentives help encourage companies to invest in automated solutions and advance the material handling industry.

If you think your company’s innovative solutions or designs could qualify for the R&D Tax Credit, contact a Swanson Reed Tax Advisor for a free assessment.

 

Chinese Made Tires- Foreign Investment with Georgia Tire Company

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Sentury Tire, a Chinese based tire manufacturer, is building a world class factory in Georgia, covering 450 acres in LaGrange. Once the factory is complete they hope to have three shifts a day with more than 100 workers on each shift, 100 specific maintenance positions, manual logistics employees, sales staff, as well as their own R&D center with 100 employees.

This new facility will present many opportunities for Sentury Tire North America (STNA), who are planning to optimize their manufacturing process and use new technology to streamline production. STNA plans to build and purchase 24 new machines for the factory and are keen on claiming R&D tax credits to help fund future technology acquisitions. They are also looking at different methods to minimize shipping costs and packaging time. These activities present opportunities to claim R&D tax credits, which can be used to provide further funding for development.

If you would like to find out how your company could benefit from R&D tax credits, contact a Swanson Reed R&D Tax Advisor today.

Increased 3D Printing in STEM Initiatives Assisted by R&D Tax Credit

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Science, technology, engineering, and mathematics (STEM) initiatives have recently turned to 3D printing to build tools and equipment in response to the increasing demand for laboratory equipment. Tools are built faster and more cost-effective when created using 3D printers. The Research and Development (R&D) Tax Credit aids in this type of work by encouraging innovation.

The R&D Tax Credit, introduced in 1981, allows up to 13% credit for eligible spending on project and product innovations. Research qualifies by meeting the Four-Part-Test:

  1. New or improved products, processes, or software
  2. Technological in nature
  3. Elimination of uncertainty
  4. Process of experimentation

The R&D Tax Credit was made permanent by President Obama on December 18, 2015. Costs such as labor, supplies, testing, research expenses, and developing a patent are all eligible under the R&D Tax Credit. Startup businesses have an allowance of $250,000 per pay year in payroll taxes that they can use the credit against.

The vast array of products created through 3D printing have a direct benefit to STEM initiatives. These benefits range from materials including plastics, steel, copper, and ceramics, to equipment such as beakers, test tubes, pulleys, microscopes, and custom add-on components for equipment and instruments. As well developing an extensive range of products, there are also cost-saving benefits to 3D Printing. A recent study by the Public Library of Science found over 97% cost reductions using 3D printed optics equipment.

Scientists and engineers are also turning to open source models in which designs are shared for 3D printed lab equipment. The model originates from computer science where programmers made source code publicly available for use or modification from the original design. In 3D printing, exact replicas or modified designs are being created using this open source concept which promotes evolution and improvements along the way.

Scientists and engineers using 3D printing in innovation may be eligible for R&D Tax Credits. To find out if your project qualifies or to learn more about the program, contact a Swanson Reed Tax Advisor.

R&D Tax Credit for Software Companies

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Research and development (R&D) tax credits can make a significant difference to a company’s tax return, with the US government providing billions of dollars worth of credits annually. Despite the financial benefits, many software companies are not taking advantage of the credit, as they believe that their work does not qualify.

While this may have been the case in the past, changes to the PATH Act of 2015 expanded eligibility to include small and medium sized businesses who may not have previously qualified, allowing them to offset their regular and alternative minimum tax liabilities and use the credit against payroll taxes. Prior to these changes, many tech start-ups could not claim the credit as they were not yet profitable. The Startup Provision amendment acknowledged the fact that start-ups are some of the country’s most innovative companies. Further changes to the PATH Act also made the credit permanent, so that innovative companies could continue to invest in R&D with confidence.

Another incorrect assumption is that the software needs to be developed for commercial use. The R&D tax credit can be applicable to the development of improved internal business systems. Any applied science and technology that is used to solve a practical business problem can be considered qualified R&D. This means that the software should be new to the business, but does not need to be groundbreaking. Improvements to a program, new iterations, coding solutions and developing algorithms can be considered eligible activities. The work does however need to differ from existing software and there needs to be substantial financial risk if the project proves to be unsuccessful.

Finally, it is also possible to claim for paid work. For government contracts, eligibility will depend on the terms of the contract. For instance, the contract must state that the work will only be paid for if successful, otherwise there is no financial risk to the company for the research.

It is a good idea to consult a tax advisor to determine your eligibility. Contacting Swanson Reed R&D Tax Advisors for a free assessment is a fantastic first step. They will guide you through the process, taking away any uncertainty or stress in claiming the R&D tax credit.

Fostering Innovation in the Energy Sector

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Innovation helps to develop the economy, create jobs and improve our standard of living. In recent years, we have seen innovation hubs popping up all over the world. Innovation is not only created through research institutions but through experimental research and development activities in commercial environments. In fact, many experts cite collaboration between industry and researchers as crucial to successful implementation of innovative ideas. Building an environment that fosters innovation requires mindful effort on behalf of the government, academia and business.

Jon Creyts and Curtis Probst from the Rocky Mountain Institute recently wrote an article regarding innovation in the energy sector. They mentioned that America’s early success in clean energy was greatly influenced by research and development funding, which encouraged businesses to innovate in the sector and created incentives for greater risk-taking. Creyts and Probst believe that whilst stability is important for capital providers, a portion of their financial system must provide adequate risk capital to support higher risk ventures.

Furthermore, although laws and regulations have an important place, they can increase business costs and stifle innovation at the same time. Creyts and Probst argue that innovative technologies (such as rooftop solar power) can reduce the costs of business as well as the negative effects of energy production on the environment, and therefore regulators need to leave room for experimentation.

It is imperative that today’s energy companies keep up with the rapidly changing sector. Many new technologies are emerging and challenging current energy production methods. This change will affect all industries as economies rely heavily on energy usage.

To assist with the transition, federal and state R&D tax credits are available for energy companies investing in qualified innovative activities. Companies can find out whether their project is eligible for the credit by contacting Swanson Reed R&D Tax Advisors. Tax incentives and disincentives allow policies to favor positive outcomes such as clean energy and discourage less desirable outcomes such as the burning of fossil fuels. Incentives can help to increase the speed that clean technology is adopted and allow for further research and development to be undertaken in order to improve existing technologies. By investing in research and development for clean energy, governments can save significant amounts of money that would otherwise be spent on conventional energy infrastructure.

New Jersey company revolutionizing farming

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In New Jersey, an innovative farming concept is completely converting traditional farming to become more sustainable and reliable.

According to the U.S Geological Survey, 70 percent of all consumed freshwater is used for agriculture and only half of this can be recycled. In addition, agriculture farming also consumes huge swaths of land and is greatly dependent on stable environmental conditions to grow high quality crops and produce.

AeroFarms is an innovative company, which believes it has a much better farming solution that will be more environmentally friendly and also provide a more stable farming environment. The company’s method requires no soil, sunlight, very little water and takes place indoors. In fact, any indoor location could be a possible fertile growing ground despite what the locations outdoor climate is.

AeroFarms stems from the initial concept of Professor Ed Harwood, who invented a new system for growing plants in a cloth material he created. There was no need for dirt use beneath the cloth and the plant roots were sprayed with nutrient-rich mist.

Harwood received a patent for his invention and founded Aero Farm Systems, which refers to ‘aeroponics’, meaning the method of growing plants without placing them in soil or water. However this company was purely a side project for Harwood and did not generate much revenue.

In 2011, David Rosenberg and Marc Oshima began exploring potential new methods to resolve the inefficiencies of traditional farming. They sensed an opportunity when coming across Aero Farm Systems and liked what Harwood had developed so much that they asked to come on-board as co-founders.

Rosenberg and Oshima proposed a change to the company’s business model and saw a bigger opportunity in optimizing the growing process and selling the crops themselves. From here the company became ‘AeroFarms’ and began to open facilities in New Jersey which consisted of a steel mill, a club and a paint ball center and began converting them into indoor farms.

Today, the farms grow and sell a large amount of produce to grocers such as, Whole Foods, ShopRite and Fresh Direct, as well as to dining halls at businesses like Goldman Sachs and the New York Times.

As the company is easily able to set up centers close to their customers and are not affected by external environmental conditions, they are able to ensure local and fresh growing all year round. As transport is therefore reduced, costs for the fresh produce are able to be kept to a minimum.

Through research and development carried out, AeroFarms can collect hundreds of thousands of data points at each facility, allowing altering of LED lighting to control taste, texture, color and nutrition. Additionally, the data also helps the company adjust variables like temperature and humidity to optimize its crop yields.

AeroFarms has proven to be 130 times more productive per square foot annually than a field farm. An AeroFarm also uses 95 percent less water than a field farm, 40 percent less fertilizer than traditional farming and no pesticides.

Leafy greens make up most of the company’s output and would traditionally take 30-45 days to grow, however with the AeroFarm method it can take as little as 12 days.

New Jersey’s new AeroFarm headquarters in Newark will be the world’s most productive indoor farm by output once it reaches full capacity. The farm consists of a dedicated R&D center, plant scientists, microbiologists, mechanical engineers and electrical engineers.

AeroFarms do still have some hurdles to overcome before it can claim to be a practical solution for replacing all the world’s farms. One significant problem is the large amount of electricity required, which is costly and also offsets much of the good done by preserving water due to the large carbon footprint it creates. Never the less, AeroFarms is working hard to address such problems and is optimistic about research findings into more energy efficient strategies.

To date AeroFarms employs 120 people across nine farms and plans to reach 25 farms within the next five years. The company has raised more the $100 million and continues to develop and spread its concept worldwide. Oshima says, “From day one, this has been about having an impact around the world,” and this is precisely what the company will continue striving to achieve.

New Jersey has several R&D tax credits available for certain qualifying R&D activities. If your company is engaging in R&D, it may qualify. Contact a Swanson Reed R&D Tax Adviser today to receive an assessment and discuss your R&D incentive eligibility.