In February 2013, President Obama signed what is being called the "the drone go-ahead." This Federal Aviation Administration (FAA) reauthorization law predicts a $5 billion sales industry of drones for a multitude of purposes, including real estate marketing, environmental monitoring, and law enforcement.
After massive investments by the U.S.
Military and multiple defense contractors and subcontractors,
the U.S. government is actively supportive of drone use in the
private sector. Adapting this technology to a wide range of
commercial uses will require substantial additional Research
& Development investment. Much of this investment will be
eligible for Federal and State R&D tax credits.
Federally enacted in 1981, the 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:
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.
Commercial drones have the potential to be used for numerous open area applications including, but not limited to:
To date, unmanned vehicles have been
primarily used for combat in Iraq, Afghanistan, and Pakistan.
The Department of Homeland Security and the CIA have used
drones internationally and for United States-Mexican border
surveillance. Federal agents have loaned drones in cases of
emergencies such as arrests and military use. Substantial
product development is required to convert existing military
drone technology into a multitude of commercial applications.
The FAA has solicited proposals to operate six drone testing centers throughout the United States. These sites will be used for civilian and military drone testing which will prepare drones for U.S. airspace integration. The testing sites will allow for evaluation and improvement of drones to prevent collisions with planes and endangerment of people and to ensure a safe introduction of the technology. These drone sites are also intended to stimulate the economies of the communities they are situated in, creating a nationwide competition to host drone sites.
Grant County International Airport in Washington is bidding to become one of these six initial drone testing sites. This effort is led by a coalition which includes Pacific Northwest National Laboratory, Innovate Washington, Washington State University, Washington Army National Guard, and State departments.
Pacific Northwest National Laboratory project manager describes the Grant County site as "complete ground support operations for fueling, maintenance and emergency response, to the existing control tower with regional radar systems, ample hangar space , conference rooms and advanced communications networks".
Another one of the six applicants is Virginia Tech, in conjunction with a multi-state venture that includes New Jersey and possibly Maryland. The FAA is expected to determine the locations of the six initial drone testing sites by the end of 2013. Furthermore, the FAA predicts that 30,000 drones will be canvassing U.S. skies by 2020.
On Tuesday, May 14, 2013, the US Navy took a big step into the fast approaching age of drones. For the first time, the US Navy catapulted an unmanned plane prototype from an aircraft carrier. The US Army and Air Force sectors already have large drone fleets and aircraft X-47B could transform the Navy's air presence and provide a new stance against Iran and China.
As their first step, the US Navy plans to
incorporate drones with sensors that will be able to intercept
communications, record video, and are infrared capable. This
will greatly extend current capabilities and "In a Strait of
Hormuz or the South China Sea or the eastern Mediterranean,
that kind of sensor package will be very, very powerful".
The potential new volume of domestic drones
itself will require innovative developments in drone air
control and drone safety management. Increased utilization of
drones with cameras, surveillance functions, temperature
monitoring, smart sensors, and other data creating functions
will generate huge new sources of previously unknown data.
This new "Big Data" source will create interest and support
further R&D predictive modeling based on drone produced
Drones use precision agriculture, incorporating global positioning, sensors, and other technology to survey farm fields. Drone sensors will produce analytics to determine growth irregularity and issues of crop fields. Numerous companies, such as Bosh Precision Agriculture of Newport News, VA, are using military drones to image visible crop ranges which are shown by infrared light.
This multibillion dollar business will
increase crop yields by 1 percent and "provide an opportunity
to see parts of the field even down to the leaf level".
Moreover, the growing drone industry is expected to produce
more than 21,000 jobs over the next 12 months.
A drone filled sky will create a whole new slew of drone privacy issues. It is one thing to know that a satellite may see an individual in their home swimming pool; it is entirely another level of intrusion to know that the cadre of local business owners and government agencies are peering into your backyard. Managing drone privacy will require the development of control devices to regulate processes. The Department of Homeland Security has introduced the Robotic Aircraft for Public Safety (RAPS) program which requires all drones to be equipped with electro optimal infrared sensors as well as chemical sensors.
The privacy issue is illustrated by the case of Kyllo vs. United States, 533 U.S. 27 (2001), in which the U.S. Supreme Court ruled "[to] explore the details of the home that would previously have been unknowable without physical intrusion, the surveillance is a search, and is presumptively unreasonable without a warrant."
In this case, the police used an infrared measuring device to scan Mr. Kyllo's apartment building for marijuana growth. The scan showed that the sides of the apartment were warmer than neighboring units and confirmed police suspicion. Kyllo argued that without a warrant, the police did not perform reasonable search.
The U.S. Ninth Circuit ruled that the
thermal imaging was permissible because in this case, the
surveillance did not violate the first amendment limiting
surveillance on private homes. The U.S. Supreme Court reversed
the Ninth Circuit Court decision and held that thermal imaging
of the apartment constitutes a search because an individual's
apartment is considered home, which is a place where there is
an expectation of privacy. The court may have to reevaluate
the long-term legalities of drone technology if it becomes
available to the mass public.
Companies both large and small are engaged in commercial drone R&D. Some of the larger companies include:
The commercialization of drones is a major technological development that is starting to impact our way of life. R&D tax credits are available to companies optimizing and managing this new technology.
Charles R Goulding Attorney/CPA, is the President of R&D Tax Savers.
Charles G Goulding is a practicing attorney with experience in R&D tax credit projects for a host of industries.
Rachelle Arum is a Tax Analyst with R&D Tax Savers.
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