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 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 (AMT) and startup businesses can utilize the credit against $250,000 in payroll taxes per year.
Toy Industry & 3D Printing
The toy industry has the potential become one of the largest beneficiaries of 3D printing, with the industry projected to be worth $135 billion by 2020. 3D print users stand to etch out a significant piece of this market, as toys are commonly ideal shapes and sizes for 3D print manufacturing and are typically made from common 3D print materials that include plastics, carbon fibers, and ceramics. This allows for the development of replacement parts, missing accessories and new features via 3D printers.
The toy industry has increasingly realized the potential for allowing users to create their own toys and parts. In 2017, Mattel plans to release ‘ThingMaker,’ a 3D printer geared towards children that pairs with an accompanying software application and allows users to print a range of toys that includes jewelry and figurines. Simiarly, XYZprinting offers the ‘da Vinci miniMaker,’ which allows users to print smaller items of varying shapes. Parents and the educational community have embraced these offerings as they’re seen as a way for children to use their creativity and imagination while building a foundation to learn technology and engineering skills.
Custom Toys
3D printers provide the ability to produce toys of unique styles, dimensions and preferences. Traditionally, consumer choices for dolls or plastic cars were limited to limited models which were available in a small range of colors or sizes. With the emergence of 3D printers however, users can mix and match a seemingly never-ending number of permutations, creating custom toys that are unique. Shapeways has recently unveiled a platform called ‘SuperFanArt,’ allowing users to sift through unique toy models, customize, and order them 3D printed. My Little Pony, Transformers, Dungeons & Dragons and other toys can be 3D printed in varying sizes, colors and shape patterns.
Cost Savings
Conclusion
3D printing is currently disrupting the toy making industry. One way for traditional toy companies such as Toys “R” Us to adapt to modern trends is by embracing technology by offering open source toy designs and printable accessories, allowing consumers to benefit by saving on costs. When technologies such as these are utilized, Research and Development Tax Credits are available to stimulate innovation.
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Charles R. Goulding and Michael R. Wilshere of R&D Tax Savers discuss 3D printing and the toy industry.