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Show Tax Benefits Aid Research the three preceding tax years; a 25 percent tax credit is allowed to be taken in the fourth year for the amount exceeding ex-ceeding the average. The 25 percent tax credit will also apply to 65 percent of the sums for outside research done through non-profit organizations. orga-nizations. The 25 percent credit cre-dit runs retroactively from July 1,1981 to Jan. 1,1986. Innova tive small companies should now be able to increase their K.&D staffs to carry out promising prom-ising basic research projects where product development was previously being employed. em-ployed. ; . THE RESEARCH Department Depart-ment of Babson's Reports is presently recommending several sev-eral attractive R&D buys., Among these are included the common stocks of such companies com-panies as Harris Corp. (average (aver-age grade), engaged in electronics, electro-nics, traded on the NYSE; and Millipore Corp. (speculative grade), a promising manufac-' manufac-' turer and distributor of filter systems and analytical instrumentation, in-strumentation, traded over-the-counter. Both have high growth potential for the long term. Enacted on July 1, 1981, new tax benefits for research and development were set in motion for American industry, according to Babson's Reports Inc. Dec. 10. These materially liberalized credits were designed de-signed for ihe purpose of rejuvenating re-juvenating our industrial productivity pro-ductivity which has been lagging lag-ging that of other major countries. coun-tries. THE NEW incentives are expected to activate the automation auto-mation of U.S. factories, allowing for the introduction of considerably more technologically technolo-gically advanced equipment as well as encouraging further innovations in-novations in industrial laboratories. labor-atories. There are six industries which allocate the largest amount of in-house (company spons-ed) research and development. de-velopment. Electical machinery machin-ery and communications (excluding (ex-cluding electronics and computers) com-puters) now rank first among those business sectors with the highest amount of R&D work company-funded. PROFESSIONAL and scientific scien-tific instruments range in second place, followed by transportation, chemicals and drugs, machinery, and petroleum pet-roleum products, in that order. While the aerospace industry would rate second-place based on total R&D support, only 20 percent is company-funded. In the opinion of the Research Re-search Department of Babson's Bab-son's Reports, the new research re-search and development provisions pro-visions should lead to increased in-creased spending by all U.S. corporations in the coming years, especially for more basic research. In particular, high technology firms are expected ex-pected to boost their outlays by 20-40 percent over the next few years in such high-growth areas as industrial robots, biotechnology, personal and office (desk top) computers, sophisticated medical diagnostic diagnos-tic equipment and satellite communications. SINCE 1973, the average yearly increase in spending for research and development by both the federal government and U.S. firms has advanced 3.4 percent (adusted for inflation). infla-tion). The rate of advance for 198 1 is estimated by the Battel-le Battel-le Memorial Institute (a renowned re-nowned private research organization) orga-nization) at around 3.8 percent over 1980. totaling $68.6 billion. bil-lion. The government is the major source of expenditures for R&D, but 70 percent of the work is performed by industry. This will come to some $48 billion of the $68.6 billion in 1981. Colleges and universities, universi-ties, the government, and nonprofit non-profit institutions will account for the balance of domestic research re-search in that order. Overall, research has kept ahead of inflation in-flation by a good percentage over the past decade and is projected to continue to maintain main-tain the healthy lead in the 1980's. SPENDING FOR industrial R&D will benefit from a 25 percent per-cent incremental credit applied ap-plied to yearly increases. Unlike Un-like the previous tax law, wages and salaries, outlays for laboratory supplies, research materials, and leasing are now included. All of the above expenses ex-penses are to he averaged over |