The R&D Tax Credit Aspects of Nanotechnology
Nanotechnology promises
to benefit society in countless ways. Even though progress can
already be seen in various domains, there is still room for
substantial developments. To this end, significant R&D
efforts are currently in place both in the academic and
corporate worlds. This article will discuss the potential
power of nanotechnology as well as the Federal tax credit
opportunity available for eligible nanotechnology R&D
activities.
The R&D 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 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 payroll taxes.
“There is Plenty of Room at the
Bottom”
Nanotechnology is the science of
manipulating matters on a molecular or atomic scale. In other
words, what characterizes this branch of technology is its
focus on extremely small dimensions and tolerances - less than
100 nanometers (billionths of a meter). Also referred to as
“nanotechnologies” and “nanoscale technologies", it includes a
broad range of activities and can be applied throughout all
science fields, from molecular biology, microfabrication, and
physics, to organic chemistry, engineering, and material
science.
Even though the idea of
seeing and controlling individual atoms and molecules first
appeared in the late 50’s, it wasn’t until the 80’s, with the
invention of the scanning tunneling microscope (STM) and the
atomic force microscope (AFM), that modern nanotechnology
emerged.
When compared to
larger-scale systems, nanoscale ones present significantly
different properties. They feature, for instance, higher
strength, lighter weight, increased control of the light
spectrum, and greater chemical reactivity. Nanotechnology has
allowed scientists to take advantage of such enhanced
properties along with the quantum effects that rule the
particle’s behavior.
The majority of
biological processes take place at the nanoscale. As
nanotechnology evolves, scientists have been able to envision
ways to create new processes that can contribute to advances
in various fields, such as materials synthesis, medicine,
computing, imaging, etc.
Even though “nano” is an
increasingly common term, it is difficult to conceive the
“tininess” we are talking about.
Figure 1 below features some elucidating comparisons:

Nanotechnology Applications
Nanotechnology can benefit society in various ways as it
revolutionizes a wide range of industry sectors, such as energy,
food safety, information technology, medicine, homeland
security, environmental science, and transportation. The
National Nanotechnology Initiative (NNI) presents an overview of
rapidly growing benefits in five different fields.
- Everyday Materials and
Processes
The
possibility of tailoring materials’ structures at the nanoscale,
has allowed scientists to awaken certain properties, such as
strength, lightness, durability, reactiveness, electrical
conductivity, among many others. More than 800 commercially
available products rely on nanoscale materials and processes.
The list includes, among many other examples:
- Lighter and more durable baseball
bats, helmets, and tennis rackets
- Wrinkling and stain resistant
fabrics
- Water-repellent, self-cleaning,
anti-fog, and antimicrobial glasses
- Cosmetic products providing better
coverage, cleansing, and absorption
- Nanosensors built into packaging to
detect spoiled food
- Electronics and IT
The
rise of Big Data calls for enhanced storage and processing
capacities. Nanotechnology has contributed to the production of
faster and more portable systems, such as:
- Faster, more potent, and
energy-efficient nanoscale transistors
- Nanometer‐scale magnetic tunnel
junctions that enhance the capacity of magnetic random
access memories
- Organic light-emitting diodes
screens (OLEDs), nanostructured polymer films that depict
brighter images with higher picture density, wider viewing
angles, and longer life spans
- Sustainable Energy
Nanotechnology stands out as a central asset in the search for
clean, inexpensive, and renewable sources of energy, as well as
a means to decrease energy consumption and the environmental
footprint.
- The production of nanostructured
solar cells, through print-like manufacturing processes, is
less costly than that of standard ones and results in easier
to install, lightweight, and flexible panels
- Nanotechnology has been used to
decrease fuel consumption in vehicles and power plants
through improved combustion efficiency and reduced friction
- Nano-engineered batteries present
higher efficiency and power density, along with the ability
to hold electrical charge longer
- Windmill blades made from an epoxy
containing carbon nanotubes are lighter-weight, stronger,
and longer than others and therefore can generate more
electricity.
- Environmental Remediation
Nanotechnology applications can greatly contribute to more
eco-friendly practices. A few examples include:
- Nanomaterials used in the production
of clean water from polluted sources
- Nanotechnology-based air filters are
already present in 80% of automobiles sold in the U.S. They
perform a mechanical filtration that traps particles larger
than its nanoscale pores.
- Recently developed nanofabric paper
towels are able to absorb twenty times its weight in oil
- Health Applications
Medical tools and procedures can be made cheaper, safer, and
more personalized through nanotechnology. Recent advances
include:
- Nanoparticles have been used as
platforms to increase the efficiency of cancer
treatments through the precise targeting of cancer
tissues
- Nanoparticles are a tool in early
Alzheimer’s diagnosis and therapy as well as the early
detection of atherosclerosis
- Semiconducting nanocrystals, the
so-called quantum dots, provide up to 1,000 times better
optical detection than traditional means.
- Still in the research and
development stage, nanobots will theoretically be able to
instantaneously detect, diagnose, and treat ailments within
the body.
National Nanotechnology Initiative
(NNI)
Founded in 2000, the NNI is an interagency effort whose
objective is to create a framework of shared goals, priorities,
and strategies to foster and coordinate nanotechnology R&D
throughout the United States. The NNI gathers 27 Federal
agencies engaged in nanotechnology-related activities and aims
at opening the way for “a future in which applications of
nanotechnology will lead to a revolution in technology and
industry that benefits society” .
The organization identifies critical R&D targets, which
include:
- Fundamental Nanoscale Phenomena and
Processes
- Nanomaterials
- Nanoscale Devices and Systems
- Nanomanufacturing
- Environment, Health, and Safety
From 2001 to 2014, NNI’s
investment will total around $20 billion – the proposed 2014
Federal Budget alone would allocate more than $1.7 billion to
the NNI, numbers that in fact reflect the accumulation of member
agencies’ nanotechnology R&D budgets. This amount supports
various Federal grants and funding opportunities aimed at
assisting businesses, universities, and research institutions in
the discovery and deployment of novel nanotechnology
information. Throughout the nation, there are more than 100 NNI
agency research and education centers, and user facilities.
University Nanotechnology Efforts
Major U.S. research universities are engaged in a wide range of
nanotechnology R&D activities, as briefly summarized below:
Rice University
Created in 1993, the Smalley Institute for Nanoscale Science and
Technology was the first nanotechnology center in the world.
With the objective of “leading the world in solving humanity’s
most pressing problems through the application of
nanotechnology”, the center has focused on civilization’s “grand
challenges”, namely, energy, water, environment, disease, and
education. Recent achievements include the use of ribbons of
grapheme (originally carbon nanotubes) to enhance the efficiency
of batteries, the unveiling of a novel method for tailoring
optical processors, and the creation of a new type of organic
solar cells based on block copolymers.
Massachusetts Institute of Technology
For over ten years, the
Institute for Soldier Nanotechnologies (ISN) has used
nanotechnology to improve soldier protection and survivability.
Working in partnership with the US Army and industry
representatives, a team from MIT has researched materials,
devices, processes, and systems, as well as the transition from
theoretical advances to practical and affordable products useful
to the soldier. ISN is focused on using nanotechnology to
combine enhanced functionality, comfort, reduced weight, and
improved blast and ballistic protection.
University of California
The California NanoSystems
Institute (CNSI) gathers from UCLA and UC Santa Barbara around
the common objective of enabling the “rapid commercialization of
discoveries in nanoscience and nanotechnology”. CNSI’s 188,000
square foot state-of-the-art facility houses research on four
targeted areas: Energy, Environment, Health-Medicine, and
Information Technology. Recent advances include the development
of a groundbreaking water treatment membrane for municipal and
industrial wastewaters, including those co-produced during gas
and oil extraction. The innovative polymeric-ceramic membrane is
cheaper than conventional ones and allows for a high level of
purity as its pores range from a few to a few hundred
nanometers.
Harvard University
The Kavli Institute for
Bionano Science and Technology (KIBST) at Harvard University
aims at developing a deeper knowledge of the functioning of life
and biology at the nanoscale. A variety of researchers,
including biologists, chemists, engineers, physicists, and
Harvard Medical School clinicians, work together to establish
correlations between nanoscale structures and the operational
features of biological systems. Ongoing projects include the
fields of artificial intelligence, robotics, biomineralization,
crystal engineering, biooptics, among many others.
Cornell University
Cornell’s School of
Applied & Engineering Physics has engaged in significant
nanotechnology research efforts. R&D activities focus on
different fields, particularly, the electronic properties of
nanoscale structures, nanomagnetics, nanoelectromechanical
systems, and nanocharacterization. The nanoscience and
nanotechnology research programs have access to state-of-the-art
facilities, such as the Cornell Nanofabrication Facility, the
Cornell Center for Nanoscale Systems, and the Nanobiotechnology
Center. Current projects include the attempt to enhance the
capabilities of electronic technologies through the study of
Silicon and carbon-based nanoelectronic systems, and the
development of groundbreaking approaches for
ultra-high-resolution materials processing and nanolithography.
Corporate R&D Examples
The
considerable amount of ongoing university nanotechnology
research has driven an ensuing wave of corporate nanotechnology
R&D aimed at making theoretical discoveries into
commercially available products. Businesses engaged in
nanoscience-related R&D efforts, particularly the
application of ground breaking information into marketable
alternatives, are likely to qualify for significant Federal
R&D tax credits. The following paragraphs present remarkable
examples of corporate nanotechnology R&D.
The development of
targeted drugs, for instance, has caught the eye of
pharmaceutical companies. Pfizer Inc. has
recently announced payments of at least $160 million per drug
developed in partnership with BIND Therapeutics. This is part of
a collaboration aimed at using nanotechnology to design targeted
medicines. The company is currently working on Accurins, a group
of targeted and programmable drugs for cancer, heart disease,
and inflammatory disorders. Still in its early-stage testing,
Bind-014 is expected to adhere to a specific protein found in
cancer cells and to vessels that feed tumors. The drug would
then liberate the chemotherapy medicine Docetaxel.
When it comes to
electronics, potential for advances due to nanotechnology is
massive. An interesting example comes from IBM, who has been
engaged in developing carbon nanotube chips. Scientists expect
that silicon transistors will soon reach their minimum size,
calling for alternative materials. The company believes that
carbon nanotubes will allow for the creation of extremely small
semiconductors, which will also be faster, more powerful, and
more energy efficient than silicon ones. IBM’s Watson Research
Center, in Yorktown Heights, NY, currently houses intense
R&D activities focused on creating the first high-density,
self-assembling carbon nanotube computer chip process.
Lighting is yet another
field that can be revolutionized by nanotechnology. Sony, for
instance, already has a range of televisions that use quantum
dots – miniscule crystals of semiconductor material measuring
just a few nanometers. These tiny devices have proved to yield
significant performance enhancements, including the depiction of
more vivid and purer colors than liquid-crystal displays (LCDs).
For now, quantum dots are used in combination with conventional
light-emitting diodes (LEDs), which provide backlight. R&D
efforts are currently underway to allow them to be used directly
as the colored pixels on screens.
LEDs themselves can also
be transformed by nanotechnology. The start-up company
LumiSands, founded by researchers from the University of
Washington, claims that LEDs can be made cheaper and greener to
manufacture. The answer would be the use of silicon-based
nanoparticles, silicon quantum dot phosphors, which constitute a
cost-effective and eco-friendly alternative to phosphors derived
from rare earth elements (REEs), conventionally used. REEs
are expensive and hazardous to extract and process. In addition
to reduced costs and environmental footprint, LumiSands’
solution would also result in a softer light, similar to
sunlight.
BESS Technologies, from
Albany, NY, is another example of a start-up company engaged in
nanotechnology R&D. Their goal is to improve energy storage
and charging capacity of lithium-ion batteries through a
silicon-based anode design. Created by students from the
University at Albany’s College of Nanoscale Science and
Engineering, the company was recently awarded a $218,000 grant
from the New York State Energy and Research and Development
Authority.
Conclusion
Nanotechnology can change the way the world works. Potential
benefits are plentiful and range from everyday materials to
health, IT, and environmental applications. University
nanotechnology efforts have set the basis for innovation and
opened the way to an ever-growing commercial R&D wave.
Federal tax credits are available to support eligible
nanotechnology R&D activities.