Toyota makes generous research donation

toyota erlanger tema 3 03202017

Toyota has donated its Erlanger Kentucky engineering and research facility to become an innovative educational center serving the region.

One of the buildings at the Erlanger headquarters is now being donated to the Ignite Institute at Roebling Innovation Center, name after famed engineer John A. Roebling. The donated facility is a 183,000-square-foot Quality and Production Engineering Laboratory and will serve as a science, technology, engineering, art and math education center.

Toyota hopes that this enduring gift will inspire the next generation of local workers to be creative, engaged, highly skilled, tech-savvy and work-ready problem solvers.Toyota’s goal through the donation of its research facility is to create a lasting positive impact by helping to prepare students for the next generation of jobs, and they encourage other large companies and businesses to do the same.

The school will allow a capacity of 1,000 students from grades 9-12, with the first class expected to take place in the 2019 school year. Through Toyota’s generous donation, Boone County Kentucky will be able to offer it’s students the best education in research, development and innovation. The entire school will be based on a project-based learning and real industry-case methodology, which aims to empower students and offer them the opportunity of a lifetime throughout their schooling and also after they graduate.

Following the donation, the Kentucky Government announced a $6.8 million construction of research facilities grant to further develop the facility to suit the requirements and environment of 9th-12th grade schooling. This partnership between Toyota and local education of Kentucky serves as proof that the state is on track to become the nation’s unparalleled hub of engineering and manufacturing excellence.

To find out whether your company is eligible for a state research credit for construction of research facilities  Contact a Swanson Reed specialist.

GE opens oil and gas R&D center in Oklahoma

1475771430341

Two test wells drilled deep underground and a well simulation towering five stories above, highlight the advanced research capabilities of GE’s Oil and Gas Technology Center.

GE have opened their oil and gas technology center in Oklahoma City, which is expected to become the central hub for the company’s scientists and engineers to collaborate with the oil and gas industry on digital and hardware solutions and advancements. The center consists of five stories and 125,000 sq ft of lab and office space, suitable for 230 employees.

The facility is designed to advance technology throughout the oil and natural gas industry, and is the company’s 10th worldwide research center, however, the first to specialize in one area.

GE’s CEO, Lorenzo Simonelli, says the research focus at the center will span across all areas of oil and gas such as; production solutions and well construction systems, oilfield facilities and systems, and reservoir performers. Simonelli believes a strong commitment to R&D will help the oil and gas customers find new efficiencies to work through tough market conditions and lead to transformational opportunities for the industry to thrive long term.

“This is a unique center from a global perspective and the plan is to be at the forefront and take the industry forward through applied technology,” Simonelli said. “Unconventional oil and gas drilling is taking place in other parts of the world. There is an opportunity to bring them in here to study and learn with others in the industry. This is going to provide the ability for commercialization of new technology and a new approach at a faster pace.”

The new technology center will accelerate innovation, the center will enable the full power of digital solutions and technology from across GE’s industrial businesses to advance the oil and gas industry.

While the oil and natural gas industry has used improved technology over the past decade to unlock vast amounts of oil and natural gas, the industry remains inefficient, said Mike Ming, general manager of the research facility. The new technology outcomes from this center will solve this issue by utilizing reserves in cost-effective and environmentally friendly ways and subsequently attracting companies from across the nation and around the world.

An innovative creation which has already been developed at the technology center is ‘Raven’ the prototype drone, engineered to detect emissions precisely and cost-effectively. ‘Raven’ has already been successfully piloted and was able to detect emissions from oilfield equipment at well sites in Arkansas. ‘Raven’ is one of many exciting developments to be produced from Oklahoma’s new research center.

To find out whether your company could qualify for the Federal Research Credit, Contact a Swanson Reed specialist.

Albuquerque builds $35 Million high-tech R&D hub!

Innovate ABQ

Construction of the first building in Albuquerque’s high-tech research and development hub has officially begun in Central and Broadway Downtown.

The $35 million, 160,000-square-foot facility will house the University of New Mexico’s tech-transfer office and Innovation Academy, along with start-ups and partners involved in collective efforts to build a bustling, high-tech business zone in the heart of Albuquerque. The building will also provide housing for students studying in the entrepreneurial education programs and launching businesses.

Citizens of Albuquerque are very excited about the construction progression of the city’s R&D hub and are eager to be the first to take a tour when it is due for completion in August 2017, they believe the facility will forever change Albuquerque’s downtown skyline and will revitalize the whole area.

The R&D hub will facilitate education for entrepreneurs, provide lab facilities for state research universities and will reserve 2,000 square feet for the Air Force Research Laboratory to open a tech-transfer office.

It is already predicted that the University of New Mexico will intake 500 students into their own academy section of the R&D facility. This Academy will allow students to receive direct experience and real-world skills in entrepreneurship. The academy will consist of meeting areas, classrooms, individual working spaces and a state-of-the-art visualization room.

Academy Director, Robert DelCampo, describes the R&D hub as a one-stop shop, as students will live upstairs in trendy apartments, work on new technology and business ideas downstairs, and then walk to the Supporting Technology Transfer Center next door to get help taking their developments to the market.

While building such an innovation facility may be a huge investment, New Mexico state board strongly supports encouraging the future of its current and upcoming generations. Innovation is the future, without innovation, fresh ideas cannot be developed, resulting in the demise of projects and organizations.

The people of Albuquerque identified the need to significantly invest in the future of its entrepreneurs, business owners and organizations, by building this R&D facility, and are highly optimistic about the positive future outcomes resulting from it.

If you are an entrepreneur, business owner or are simply wanting to know more about R&D and how you may be eligible for the R&D Tax credit, contact a Swanson Reed specialist today.

 

 

New York Announces an Initiative of $650M for Life Sciences

Test Tubes small

The Empire State Boosts Life Science

With the aim of becoming a top tier biocluster state, New York has announced an initiative to increase the state’s ability to commercialize research by investing $650 million into life sciences. The incentive hopes to have a success rate similar to those of California, whose company growth has accelerated that of job growth and Massachusetts, which invested $1 billion in a highly successful life sciences program 10 years prior.

As announced by Governor Andrew Cuomo the initiative will include $250 million in tax incentives for life science companies (new and existing), $200 million for capital grants towards wet labs and innovation space, $100 million towards early stage life science development and $100 million towards operating support from private partnerships.

The term life sciences has been defined by New York State as including, “biopharma, biomedical technologies, life systems technologies, as well as organizations and institutions that devote most of their efforts to research, development, technology transfer, and commercialization.”

In recent years, despite the presence of major academic research centers and Wall Street, New York has lacked commercialized research, early-stage company incentives, and biocluster development reported by Genetic Engineering & Biotechnology News.

Good News For R&D

The incentive will support the job market by investing $10 million annually in the Excelsior Job program. Refundable tax credit will be available at a 15% rate to life science businesses and at a 20% rate for small life science businesses.

The state also plans to attract life science talent to the state through internship programs, research recruitment programs, a mentor program to bring together entrepreneurs and innovators, and a program to support teaching hospitals with over $8.5 million in support annually.

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.

R&D Growth In Higher Education

Team and whiteboard Copy

A report focused on federal R&D funding for higher education, published by the National Center for Science and Engineering Statistics (NCSES), shows that 2016 is the fourth consecutive year in which federal R&D funding has decreased since its peak in 2011.

As of 2015 universities reported a 2.2% increase from the previous year at $68.8 billion in R&D spending. The data was collected from 906 degree-granting institutions that has spent a minimum of $150,000 the year prior.

Since 2011, where federal funding supported 62.5% of higher education R&D costs, R&D funding has declined by 13%. A decline in funding of 1.7% was recorded between 2014 and 2015. Of the $68.8 billion spent during 2015, federal funding covered only $37.9 billion dropping the percentage of funding to 55.2%.

While federal funding has decreased, research has continued to grow by 2.2% from the previous year with additional funding from other sources at 6.4%. Medical science was reported to have supported the highest growth rate spending $21.3 billion while biological and engineering sciences floated around $11 billion.

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.

Trump’s Proposed Tax Reforms

shutterstock 92766073

After a dramatic election season the proposed tax reforms of US President Elect, Donald Trump, are currently a topic of great interest for businesses. While pre-election reform plans may not necessarily become legislation, Trump will be supported by Republican chambers of commerce, making passing legislation more likely in absence of strong opposition.

How Might This Affect R&D?

In an attempt to decrease corruption due to the influence of special interests, Trump plans to eliminate special interest outlays and most business tax credits such as the domestic production activities deduction and the work opportunity credit which currently supports veterans among other groups. These points are controversial as many of the expenditures he proposes to eliminate relate more to public policy concerns than they do to special interests.

However, one positive position maintained through Trumps reforms is the continuation of the Research and Development (R&D) tax credit. This influences greater innovation and improvement of existing systems or processes within industry. As Trump promotes the repatriation of labor and production, an increase in R&D support could be a possibility. Some predict that Trump may use the incentive as a maner of influencing larger percentages of manufacturing, not just research, within the U.S.

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.

The Secret Ingredient to Craft Beer Growth

bigstock Whiskey And Natural Ice 80724569

The market for craft beer has been growing steadily since the late 1990’s. As of 2015 craft brews dominated 12% of the beer market by consumption and 21% by spending. In comparison with other high end beverage markets, craft beers potentially have plenty of room for growth as specialty coffee and spirits typically control 40% of market share.

While the US now has over 4,600 craft breweries, some industry experts have noticed a tendency for brewers to focus on production, leaving brand improvement activities to the side. The 0.2% drop in total U.S. beer market in 2015 spoke to the consumer desire for fuller flavor. This drop occurred as spirits and wine absorbed the market share of wavering beer drinkers. As consumers move away from cheaper, less flavorful beverages craft brewers are able to charge for quality. We see this as a hopportunity!

Experts recommend for craft brewers to perfect brews and production while simultaneously developing brand strength through R&D to remain competitive in a growing market. Many companies immediately consider their operations ineligible of claiming R&D, however, activities such as production line redesign and brew recipe innovation can be considered eligible. 

In the first few years of development many SMEs (small to medium enterprises) are in crucial need of cash flow in order to solidify their position in the market.  During this time receiving returns on R&D through the Research and Development tax incentive support the growth of an entrepreneur.

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.

Worldwide Innovation Leaders Come Together Over AI

banner wassertechnologie o

Tech leaders Google, Facebook, Microsoft, Amazon and IBM have joined forces to form the Partnership on Artificial Intelligence to Benefit People and Society (Partnership on AI) announced in September.

Just as the name suggests the organization will carry out research and development on artificial intelligence with the fundamental purpose of identifying potential AI challenges for people and society. The partnership hopes that their discoveries will effectively self-regulate the industry independent of government intervention.

Why Be Apprehensive of AI?

Artificial intelligence has enabled major improvements in areas such as manufacturing and transportation, as well as education and healthcare. Despite these developments many people are increasingly uncomfortable with the idea of increasing intelligence in machines designed to think and problem solve independently.

Among experts in the industry, the concern is that these intelligent machines will continue to learn from their environment, eventually outsmarting humans. Two of these people are Elon Musk and Stephen Hawking – both who have warned of the destruction of the human race. Nick Bostrom, a professor at Oxford, believes these machines will supersede humans within decades.

Goals of the Partnership on AI

LeCun, Facebook’s AI research director, has said, “We aim to push new boundaries every day, not only within Facebook, but across the entire research community. To do so in partnership with these companies who share our vision will help propel the entire field forward in a thoughtful responsible way.”

Designated areas of research highlighted in Business Insider include;

  • Ethics, fairness and inclusivity;
  • Transparency , privacy and interoperability;
  • Collaboration between people and AI; and
  • Trustworthiness, reliability and robustness of technology.

The interview also included an eight point plan to benefit and empower as many people as possible, actively engage stakeholders and the public, open research to dialog, address challenges and maximize benefits, allow information to be interpretable and accessible, and to create a beneficial culture of openness.

The partnership has agreed to include academics, non-profits and other organizations such as Open AI, AAAI and AI2 in their research and findings.

Research and Development Tax Incentive

While we know many of our readers are most likely not performing research and development with Elon Musk or developing dogs with artificial intelligence, you may still be eligible to receive benefits from the R&D tax incentive.

Many companies deem themselves ineligible before reading the requirements.

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.

U.S. R&D Employment

laboratory 1149152 1920

Research conducted by the National Science Foundation discovered that in 2013, 1.5 million workers inside the U.S. were employed for R&D (research and development) purposes meaning they provided direct support or worked directly on R&D. Those 1.5 million constituted 1% of the U.S. workforce.

The research also found that smaller companies were more likely to support a greater percentage of R&D staff than larger companies. This is due to the innovation, startup and small business atmosphere that is fundamental to the structure and success of these small companies. Larger companies employ roughly 6.5% R&D members where small businesses employ almost double at about 11.7%.

The largest R&D employment industries in 2013 were:

  • Semiconductor and other electronic components (32.4%);
  • Software publishers (25.4%); and
  • Pharmaceuticals and medicines (18.8%).

Within these industries alone the R&D workforce was calculated as two-thirds of the 1.5 million U.S. research and development employment population.

Despite the large scale research and development performed within the U.S., many companies are still foregoing the opportunity to receive the tax break provided through the R&D Tax Incentive, which was created to support innovation and development. In many cases companies do not claim due to a lack of knowledge regarding eligibility.

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.

The Wait is Over – Internal Use Software Regulations Finalized

Capitol Washington DC e1457327245880

The United States Treasury proposed new regulations regarding Internal Use Software (IUS) for purposes of the research and development (R&D) credit under Section 41 of the Internal Revenue Code on January 20, 2015. These proposed regulations were finalized on October 4, 2016, bringing the suspense to an end. The finalized regulations are very similar to those proposed which was not the only positive outcome. The definition of IUS for purposes of the Research Credit was clarified and the non-IUS definition extended, aiding taxpayers in determining eligibility requirements. The IRS also provided clarity on how dual-function software is treated and what type of internal software can still qualify for the Research Credit. The regulations were not introduced retroactively and taxpayers are not able to amend prior returns.

 

Overview of Clarifications of IUS

The finalized regulations provide a clear definition of IUS as software developed for general administrative functions facilitating or supporting the conduct of the taxpayer’s business. Generally these functions are administrative or general tasks required for the function of the business, and are not designed for client use.

They are defined in three categories:

  • Financial Management
  • Human Resources Management
  • Support Services

Software characteristics not qualified for the Research Credit:

  • Software offered for commercial sale, lease or licence, or otherwise marketed to third parties;
  • Software to enable a taxpayer to interact with third parties; or
  • To allow third parties to initiate functions or review data on the taxpayer’s system.

Any software developed primarily for any purpose described above is not considered to be IUS within the new regulatory definition.

 

The Consistency Rule

The finalized regulations require taxpayers who have previously claimed the research credit to adjust and recalculate their base calculations in order to claim research expenses under the newly defined, favorable regulations in current and future years’ returns. Taxpayers must perform two calculations;

  • One applying the new regulations for tax years after January 20, 2015; and
  • One for any returns amended for prior years by choosing between TD 8930 or Regulation 1.41 – 4(c)(6)

 

Dual Function Software

Dual function software is presumed to be software that has been designed primarily for a taxpayer’s internal use. However where a taxpayer can identify a subset of elements of the software that only enable to the taxpayer to interact with third parties or allows third parties to initiate functions or review data, that presumption does not apply. The portion of expenditure allocated to this subset only needs to qualify for the Research Credit under the less stringent four-part test.

Where this third party subset has been identified and their remains dual function software or a subset of elements of dual function software a safe harbor rule is applicable. This allows for a taxpayer to include 25 percent of the potentially qualified research expenditures associated with the dual function subset through meeting the four-part qualifying test, while the remaining 75 percent would have to meet the higher threshold of the innovation test below.

Safe harbor is applicable where such third party interactions are reasonably anticipated to constitute at least 10% of dual function software use. When changing focus from dual to IUS or the opposite, qualifying expenses are determined on a prospective basis according to the time of change in taxpayer intent.

 

Three Part Test for IUS

Qualification for IUS requires three core tests can be established:

  • Innovation Test – Measurable and objective, and should reduce the potential for controversy. Innovative software must result in cost reduction, measurable improvement such as speed or reliability.
  • Significant Economic Risk – reasonability test requiring detailed documentation and circumstantial consideration. Taxpayer must show commitment of substantial resources, uncertainty due to technical risk and degree of uncertainty.
  • Commercially Available Test – Analysis of whether similar software may be purchased, leased or licensed and used for the intended purpose without modification, satisfying the innovation and significant economic risk requirements.

In determining the eligibility of your research, speaking with a qualified and experienced professional will be highly beneficial. Many opportunities to claim the research and development incentive are surpassed due to the common mistake of assuming ineligibility.

Whether you are interested in eligibility, adjusting your base calculation or preparing a claim as per the released IUS Regulations, 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.