Month: July 2016

Leviathan Wind Energizer LLC

On July 8, 2016 the management of Leviathan Wind Energizer LLC had a telephone conference with potential investors and their advisors about the firm’s prospects. I arranged for Alfred University to have access to this call.Wind Turbines

Leviathan Wind Energizer designs aerodynamically structures for wind turbines. The Wind EnergizerTM can typically  enhance  power  output  by  30%  and,  at times,  at  lower  wind  speeds, by over 100%. The prototype enhanced power output by 156% over the control over a 24 hours period. The company’s  first  patent was granted in the US in May 2012 and the second in April 2016.

 

The Leviathan Energy Wind EnergizerTM is  a  fast  way  to  combat  climate  change  (and  make  profits) because it simply optimizes already  constructed—and often grid-connected—turbines. By increasing the effective velocity in the plane of the blades, it rewrites the world wind map. Current wind  farms  can  increase  their  profits  significantly and previously unprofitable  areas  for  wind  farms—or sites that previously seemed to lack sufficient wind velocity—can now become lucrative sites.

§174 R&D Expense Deductions and §41 Tax Credits: Useful Start-up Tax Tools

Research and development (“R&D”) expenses are generally capitalized; however, taxpayers may elect to currently deduct these expenses under §174 in the tax year in which paid or incurred, or amortize them over a period of not less than 60 months. Taxpayers may also elect to claim a nonrefundable tax credit under §41 for certain qualified research expenses paid incurred for qualified research. Taxpayers may claim either the deduction or the credit for a particular expense but not both, where unused credits can be carried back one tax year, and then forward 20 years under §39.

Section 41 generally defines qualified research expenses as:

  • Supplies
  • Contract research (payments to third party businesses)
  • Basic research payments[(payments non-profits and institutions)
  • Wages for in-house R&D activities (usually the majority of expenses eligible for the credit). This expense only qualifies if paid to an employees:
    1. engaging in qualified research
    2. directly supervising qualified research
    3. supporting qualified research

Subject to certain exclusions, §41 generally defines qualified research broadly:

  • The activity must be to create new (or improve existing) functionality, performance, reliability, or quality of any taxpayer product, process, technique, invention, formula, etc. (a “Business Component”) used in the taxpayer’s trade or business.
  • The intent must be to discover information eliminating uncertainty concerning the development or improvement of the Business Component.
  • The process must be systematic process, generally using any method from the conventional scientific method to something as informal as trial and error process.
  • The process must fundamentally rely on principles of the physical or biological sciences, engineering, or computer science.

The tax credit amount is calculated by using one of three methods:

  • Traditional Credit Calculation – 20% of qualified research expenses exceeding a base amount
  • Start-Up Credit Calculation – 20% of qualified research expenses exceeding a base amount
  • Alternative Simplified Credit – 14% of qualified research expenses exceeding a base amount

Where, the base amount is the product of a fixed-base percentage and the taxpayer’s average annual gross receipts for the prior four tax years, provided that the base amount can never be below 50% of the current year’s qualified research expenses.

Note that effective for tax year 2016, qualified small businesses may use up to $250,000 of their research tax credits to offset a portion of their payroll taxes.

The FAA Releases a Sample Drone Pilot Exam as a Study Guide

Effective August 29, 2016 the FAA’s new drone regulations will permit small drones to be operated commercially by eligible pilots that are certified. Those not already holding a pilot certificate may become certified by passing the initial aeronautical knowledge test at an FAA-approved knowledge testing center.

That test will cover the following:

  1. Applicable regulations relating to drone rating privileges, limitations, and flight operation;
  2. Airspace classification and operating requirements, and flight restrictions affecting small drone operation;
  3. Aviation weather sources and effects of weather on small drone performance;
  4. Small drone loading and performance;
  5. Emergency procedures;
  6. Crew Resource Management (CRM);
  7. Radio communication procedures;
  8. Determining the performance of small drones;
  9. Physiological effects of drugs and alcohol;
  10. Aeronautical decision-making (ADM) and judgment;
  11. Airport operations; and
  12. Maintenance and preflight inspection procedures.

The FAA released a Sample Drone Exam as a study guide.

Reference Material:

Prior Posts:

Drones: A STEM Gateway for Small Rural Universities

The FAA recently made small drones easier to use commercially; however, many don’t know that in May 4, 2016 the FAA also provided guidance for their educational use freeing faculty and students to more fully embrace this new technology. Drones are a popular and affordable technology that can draw students into careers in science, technology, engineering, and mathematics (STEM). They can easily be used to creatively teach mathematics, electronics, programing, materials and battery and optical engineering in addition to business subjects such as marketing, finance, and management. The science behind flight is much easier to teach when students can apply the lesson in a lab just outside their classroom, and it’s here that small rural universities have an edge.

Small rural universities have the open space that drones require to operate, a large advantage over their urban counterparts. Importantly, drones can give students the practical experience they need by helping the local agricultural, construction, photography, and business community.

In short, drones are here to stay and small rural universities are well positioned to serve their students and communities by fully embracing this technology.