Enhanced R&D Tax Credits for Specialized Co-Shared Spaces
Co-Shared-Spaces
In recent years, co-shared spaces for
modern businesses have experienced tremendous growth. Now, the
increasingly sophisticated co-shared space market is focusing
on specialized business verticals or themes to distinguish
themselves and attract more like-minded tenants with similar
resource needs. To support specialized tenants, co-shared
space owners are increasingly making investments in the
facilities, assets, and programs necessary to support tenant
categories. Landlord investments in these shared space assets
and programs are assisting tenants in identifying and
documenting enhanced 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/Improved Products, Processes,
or Software
- Technological in Nature
- Elimination of Uncertainty
- Process of Experimentation
Eligible costs include
employee wages, supplies, contract research and testing
expenses, and costs associated with developing a patent.
On December 18, 2015 President Obama signed the bill making
the R&D Tax Credit permanent. Beginning in 2016, the
R&D credit can be used to offset Alternative Minimum Tax
and startup businesses can utilize the credit against $250,000
per year in payroll taxes.
Selected Specialized
Co-Sharing Themes
Hardware
Asset investments to support hardware co-sharing themes
include:
- 3D Printers
- Machine Tools
- Tool Cribs
- Welding Equipment
- Packaging Equipment
- Robots
This category of shared space tenants
typically need larger physical facilities, stronger floors,
inventory storage areas and receiving and loading docks.
Media
Media tenants need access to some very specific and
specialized equipment. Asset investments to support
media include:
- Studios
- Audio Video Equipment
- Theaters
- Green Rooms
Software
Software is one of the largest shared space categories.
Software developers need strong computer hardware and telecom
support systems including high speed networks, redundant
server banks and data security.
Life Sciences
Life Science tenants with wet lab requirements need controlled
HVAC (Heating, Ventilation and Air Conditioning Systems) and
specialized mechanical systems. Robust ventilation systems and
protective fume hoods are particularly important for wet labs.
Flexible laboratory spaces are needed to accommodate both
changing tenants and various sciences. Physical
proximity to major universities and university hospitals is
also a key factor so doctors, professors, and students can
access facilities for varying time periods, perhaps 24/7.
Program Themes
University Incubators
University incubators need proximity to the sponsoring
university so both professors and students can access base
time ability. In addition, university business
incubators often need expansion space options. For
example, a manufacturing start-up may only need a small space
during the conceptualization stage but a large space once
actual manufacturing commences.
Urban Science, Smart City, and E-Gov
These programs need connectivity to government agencies and
government initiatives including economic development and the
city planning department.
Conclusion
The co-shared space
is becoming more specialized and vertically focused. Landlords
can use specialization to differentiate themselves and justify
facility and equipment investments to attract particular
tenants. Tenants can utilize these customized facilities and
assets to augment their Federal and State R&D Tax
Credits.
