The R&D Tax Credit Aspects of Delaware Innovation
Despite its small geographical footprint,
Delaware is a major state for innovation. The federal and
state Research and Development Tax Credit is available to
assist commercial innovation in Delaware.
The Research &
Development Tax Credit
Enacted in 1981, the federal Research and
Development (R&D) Tax Credit allows a credit of up to 13%
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. As of this writing, both the Senate Committee
on Finance and the House Committee on Ways and Means have
recommended extension of the R&D tax credit.
Delaware R&D
Credit
In order to boost Delaware's job market and
to create synergy between large research companies and smaller
independent startups, lawmakers have enhanced the state's
research and development (R&D) tax credit for small
businesses. Previously, the state of Delaware had offered
R&D incentives to in-state businesses by matching 50
percent of the federal tax credit given to eligible
organizations and the state drew from a $5 million per year
budget. However, there was no distinction between large and
small businesses. Therefore, state leaders thought more could
be done to help small companies, particularly those who
generate less than $20 million per year.
Governor Jack Markell signed House Bill 318, ensuring that
smaller companies who are eligible for the R&D tax credit
will receive a greater share of funding than the larger
organizations by receiving double the tax credit. According to
Senator Robert Venables, Delaware will match a business'
federal subsidy by up to 100 percent. Larger companies will
continue to qualify for up to 50 percent of the federal
subsidy. Markell believes that encouraging research and
development in companies will incentivize innovation and
growth for Delaware, which is vital to the economy. This
legislation will undoubtedly increase opportunities for
Delaware's entrepreneurs to innovate and grow.
National Science
Foundation Grants
Rising Sea
Levels
The World Economic Forum's Global
Competitiveness Report for 2012-2013 ranked U.S.
infrastructures as 14th in the world, seven slots lower than
where it was in 2008. This considerable change can be
explained by the country's aging infrastructure, which calls
for urgent investments and upgrading efforts. A growing number
of universities and research centers are engaging in
infrastructure R&D. Their efforts speak to the importance
of this line of research and set the basis for innovation from
the private sector.
In 2013, United States Senators Tom
Carper and Chris Coons and Representative John Carney
announced $20 million in National Science Foundation funding
for four Delaware colleges and universities to invest in
science education and research. The emphases of the donations
are on the effects of sea level rise and soil contamination.
Furthermore, renewable energy and workforce development will
be studied at The University of Delaware, Delaware State
University, Wesley College and Delaware Technical Community
College.
Bioenergy Crop Research
The National Science Foundation issued a $7 million grant to
The University of Delaware, Delaware Technical Community
College, Wesley College and Delaware State University. The
grant funds the investigation of advanced molecular genetics
and epigenetic studies on perennial grasses as potential
non-food sources of fuel, and the effects of non-agricultural
land use and climate on the Chesapeake and Delaware Bays. As
part of the project, researchers are seeking to identify how
environmental forces effect gene expression in the crops.
Additionally, as another focus, they are looking at aquatic
health and changes in marsh grass equality in relation to
changes in coastal habitat. Delaware is a coastal state and
the study of climate change might prove to be vital to their
existence in a world of climate change.
University of Delaware
The new Interdisciplinary Science and
Engineering Laboratory (ISE) is a 194,000 square foot facility
at the University of Delaware (UD) that is going to be a hub
for innovation. The facility brings together students and
faculty from various disciplines to teach, learn and conduct
research in a collaborative environment. Research will provide
content for the curriculum and students will learn though
exploration of real world problems. At the University of
Delaware they have found that electric cars equipped with
technology invented at UD can send battery power back to the
grid. The approach being taken at the University of Delaware
is having biomass, wind, solar and fuel cells all have a part
to play in future energy solutions. In 2008 the U.S.
Department of Energy awarded the University of Delaware a five
year, $17.5 million grant to establish the Catalysis Center
for energy. At this center called the Energy Frontier Research
Center researchers are working to establish a scientific
foundation for a fundamentally new U.S. energy economy. The
central focus is on biomass conversion and the center's major
breakthroughs include discovering potential ways to produce
plastics from plants.
Researchers are promoting the use of
direct carbon fuel cells for converting biomass to
electricity, and replacing biological processes with thermo
chemical processes to transform trees into corn syrup that can
be used in a food or be transformed into fuels and chemicals.
Delaware STAR Campus
The first health science building at
the University of Delaware's Science, Technology &
Advanced Research (STAR) campus opened in February of 2014.
Among the first groups to move into the new center were the
Nurse Managed Health Center and the Physical Therapy Clinic.
This new campus encourages innovation at the University of
Delaware.
Delaware State
University
At Delaware State University they have
developed a Hydrogen Research Center with the primary focus of
finding novel materials that can store and release large
quantities of hydrogen gas at moderate temperatures and
pressures.
College of Education
& Human Development
The University of Delaware has been the
receiver of many grants in past years, many of which have
proved to be successful. The Institute of Education Sciences
awarded a $10 million grant to University of Delaware
professor Nancy C. Jordan, Lynn Fuchs at Vanderbilt University
in Tennessee, and Robert Siegler at Carnegie Mellon University
to fund this research and development center that will last 5
years. The center's research is aimed at understanding
difficulties that students have with fractions. The Center for
Improving Learning of Fractions, administered at UD, focuses
on improving math instruction for elementary and middle school
children with problems with math concepts, specifically
fractions. Today's commercial innovation opportunities require
a workforce with a much stronger math foundation.
Delaware
Cardiovascular Research Center
With the aging of the baby boom generation,
the impact of heart disease on the American population is
bound to grow. In this scenario, innovative ways to improve
prevention and treatment are vital. Federal R&D Tax
Credits are available to support credit eligible
cardiovascular disease innovation activities.
Cardiovascular disease is the number one cause of death in the
United States with 36% of all mortalities nationwide
attributed to this disease. Recently, a commitment to form a
regional partnership was approved and it united the Delaware
Health Science Alliance involving the University of Delaware,
Christiana Care Health System, Nemours, and Thomas Jefferson
University. In October of 2013 the center received a $1.3
million research grant for Professor Ulhas Naik to continue
his studies at the Delaware Cardiovascular Research Center. He
is determined to tease out the roles that various blood
components play in the formation of clots. Naik has been
testing a new compound that he and his team recently created
to block the stress activated enzyme ASK1, which also is found
in blood platelets. All in all, the ultimate goal of Professor
Naik's research is to find a compound that will prevent the
formation of a blood clot in circulation but not inhibit the
process of hemostasis, which arrests bleeding when one cuts a
finger.
Delaware Center for Neuroscience
Research
Since the invention of the non-invasive brain scan and
continued improvements in imaging and scanning technology,
neuroscience has been shifting from a social science to more
of a physical science. As scientists use new non invasive
brain imaging technology new products and software that
reflect the brain will be created. R&D tax credits are
available to support the development of new products and
software.
In 2012 the Delaware Center for Neuroscience Research was
awarded a five year $10.5 million grant from the Centers of
Biomedical Research Excellence program at the National
Institutes of Health. The Delaware Center for Neuroscience
Research has been featured in the publication International
Innovation which is a global dissemination resource that
provides insight and analysis on current scientific research
trends and funding and policy issues. The Center unites
University of Delaware researchers with Delaware State
University which has provided an array of perspectives in
their research.
Commercial R&D
Compact Membrane
Systems, Inc
Compact Membrane Systems (CMS) focus on the research,
development, and commercialization of membranes and thin films
composed of fluorinated polymers with exceptional gas
transport properties. With a growing patent portfolio, Compact
Membrane Systems has a successful track record of obtaining
research grants. CMS has, and is, developing a number of clean
energy applications. Some examples are Nitrogen Enriched Air
for diesel engine NOx emissions reduction, gasoline vapor
recovery, and dehydration of wind turbine gear oil and
dehydration of green fuels. Additionally CMS's business model
is to develop coating and membrane manufacturing technologies
in-house and to create and demonstrate product applications
uniquely suited to their products.
Lewis Research, Inc.
Lewis Research, Inc. is a tribological testing facility and
test equipment manufacturer which provides high quality
tribology equipment and service to clients worldwide. Their
machines are built to test the friction and wear of plastics
and other materials for use as bearings, seals, piston rings,
gears and other sliding applications.
DuPont USA
DuPont USA reportedly invests over $2 billion in research
every year. With their research and development aimed at
substantial global needs, DuPont focuses on improving the food
supply, alternative energy, and creating light weight
protective apparel in addition to electronics. DuPont has a
research and development facility in Wilmington, Delaware.
DuPont's experimental station in Delaware is responsible for
some of the world's most important scientific advances such as
Kevlar, the world's first synthetic rubber and fully synthetic
fiber, in addition to many others. The station employs more
than 2,000 scientists and researchers who are pursuing science
based solutions for global markets. Below is a map of the
experimental station's major contributions.
Bilcare Research, Inc.
Bilcare Research, Inc. is a global leader and an
innovation-led packaging solutions provider that partners with
the pharmaceutical industry to improve patient healthcare
outcomes. Their goal is to deliver effective and affordable
solutions that enhance the speed and quality of drug discovery
and help build and protect brands by ensuring the delivery of
genuine medicines to patients. Bilcare believes in excelling
through continuous research and their R&D initiatives
focus on pursuing new knowledge about innovative research
solutions in both packaging materials and its application to
pharmaceutical formulations. This continues to be their key
growth factor. Bilcare is at the forefront of delivering
sustainable, affordable and innovative packaging solutions to
customers globally.
Incyte Corporation
At Incyte Corporation, the focus is on two core disease areas
of oncology and inflammation. This is where they apply their
expertise and resources most effectively. They utilize the
vast knowledge of their integrated team. They have experienced
biologists and chemists who not only select drug targets with
strong genetic or pharmacologic validation, but also indentify
areas where they have potential to generate original molecules
and compounds that are highly differentiated from existing
treatments.
Air Liquide
Air Liquide is a world leader in gases, technologies and
services for industry and health. Their American division,
American Air Liquide Holdings, Inc., is located in Delaware
where they have a specialized R&D center. Their research
and development focuses are on process engineering, material
science, analytical science, life science, combustion, fine
chemicals synthesis & surface science and applied
mathematics. Air Liquide develops specifications and
optimization of industrial gases manufacturing process
including physical and chemical engineering, heat and mass
transfer for process plants, heat exchangers, distillation
columns, adsorbers, and more.
Conclusion
Delaware has extensive amounts of research
being performed at both the commercial and University levels.
Researchers can be assisted by the federal and state R&D
tax credit.
