The R&D Tax Aspects of the Baxter Robot

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        MIT Technology Review lists development related to the Baxter Robot (Baxter) as one of the top ten R&D opportunities of the future. The Baxter is an engaging low cost self programmable robot that is gaining tremendous attention in the manufacturing sector. As more and more leading U.S. manufacturers purchase Baxter, improvement in Baxter's functionality, manufacturing process improvements and software development should follow. These improvements are potentially eligible for Federal and State R&D tax credits.

The Research & Development Tax Credit

        Enacted in 1981, the federal Research and Development (R&D) Tax Credit allows a credit of up to 13 percent of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:

  • New or improved products, processes, or software
  • Technological in nature
  • Elimination of uncertainty
  • Process of experimentation

Eligible costs include employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent. On January 2, 2013, President Obama signed the bill extending the R&D Tax Credit for 2012 and 2013 tax years.

Baxter's History

        Baxter is manufactured by Rethink Robotics. Rethink Robotics was founded in 2008 by robotics pioneer Rodney Brooks. Rod was a co-founder of iRobot (Nasdaq: IRBT) and held positions there including CTO, Chairman and board member from 1990 through 2011.

        From 1984 through 2010, Rod was on the faculty of MIT as the Panasonic Professor of Robotics, and was the director of MIT CSAIL, the Computer Science and Artificial Intelligence Laboratory. While at MIT, Rod developed the behavior-based approach to robotics that underlies the robots of both iRobot and Rethink Robotics.

        Now, as Chairman and Chief Technology Officer of Rethink Robotics, Rod is devoted to his mission of creating smarter, more adaptable, low-cost robotic solutions that can help manufacturers to improve efficiency, increase productivity and reduce their need for off- shoring.

        Baxter is a revolutionary new category of robot that is redefining the way robots can be used in manufacturing environments. It performs a variety of simple, yet critical production tasks while safely and intelligently working next to people. How? Unlike traditional industrial robots, Baxter exhibits behavior-based 'common sense,' capable of sensing and adapting to its task and its environment. It requires no complex programming or costly integration. And with its uniquely low price point, Baxter provides a compelling alternative to low-cost off-shoring for manufacturers of all sizes. As a result, Baxter is being introduced into a wide range of plants that could never previously consider a robotic automation solution.

        Additionally, some of its features include two arms; both with seven degrees of freedom, 360 degree sonar and front camera to detect human presence and interchangeable end-effectors (think hands) for easily switching tasks.

First Movers

        The Rodon Group, a manufacturing subsidiary of K'Nex Brands integrated Baxter into its Pennsylvania manufacturing process early this year. Within a few hours of testing, Baxter was packing boxes on Rodon's factory floor. With built in sensors to make Baxter "aware" of its surroundings, this robot can be deployed near people and trained by the workers it is assisting. No lines of programming are necessary.

        A big advantage is that Baxter does not require safety guarding or enclosures. Working alongside one of Rodon's operators, Baxter can be shown how to perform a task and be re-purposed as needed. Rethink Robotics estimates it takes 10 minutes to train Baxter to do a task. This allows the plant operators to focus on more complex and production-critical assignments. Initially, Baxter will be utilized to help pack K'NEX construction toys, specifically tracks for the Mario Kart Wii racing sets but there are several other future applications in mind.

        Two additional plastics processors are "hiring" Baxter; Nypro Inc. headquartered in Clinton, Mass. and Vanguard Plastics Corp. in Southington, Conn. Both are determining the best way to integrate Baxter into existing factory configurations.

Preserving American Manufacturing and Re Shoring

        The commitment to American Manufacturing is clearly demonstrated at The Rodon Group. Rethink Robotics is working to support this mission through the development of Baxter. This robot will help improve the productivity on the factory floor and allow people to focus on more value added work, thus helping to keep production from going off-shore. These robots are designed and manufactured in the U.S and Rodon is excited about this new technology investment.

        Rethink Robotics has received scores of inquiries from companies interested in using Baxter in a wide variety of manufacturing and assembly applications; from metals fabrication and plastics companies to artisanal breweries that want to see if the robot can box bottles. Typically what Baxter is being used for in companies in these markets are "pick in place" applications, such as picking things off a conveyor and putting them into a bag or a box, and the reverse, taking things out of a box and putting them somewhere, like a conveyor.

The Next Steps for Baxter

        The type of U.S. manufacturers that purchase a Baxter are typically already quite sophisticated and typically own multiple programmable machine tools and often other programmable robots. When a leading manufacturer already has existing complex manufacturing processes, integrating new high level robotic equipment requires experimentation and thoughtful process engineering specific to that company and its products. Process engineering such as this often qualifies for R&D tax incentives. Baxter's adaptability may present additional R&D opportunities for industrial customers. Because the robot can be integrated into existing industrial settings alongside humans, using it in R&D activities such as prototyping new processes may be useful. Lastly, corporate R&D groups can take advantage of the open source software of the Baxter Research Robot to develop new functionality to meet specialized needs of a wide variety of industries.

Article Citation List



Charles R Goulding Attorney/CPA, is the President of R&D Tax Savers.

Jacob Goldman is the VP of Operations at R&D Tax Savers.

Lynn Bertrand is a Tax Analyst with R&D Tax Savers.

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