NIO is supporting an economic stimulus proposal to promote innovation and job creation by U.S. research-intensive emerging companies.The core of the proposal is a one time refund of net operating losses (NOLs) in lieu of other tax benefits to sustain critical R&D during the current financial downturn (details below).

NIO is helping build an "innovation coalition" of trade groups in support of the stimulus proposal that represent additional science and technology driven sectors of the economy which already includes the NanoBusiness Alliance, Biotechnology Industry Organization, Personal Space Flight Federation, Water Innovations Alliance. NIO is hosting meetings on Capitol Hill on February 10-11 in support of this proposal and the National Neurotechnology Initiative.

Details

Economic Stimulus Proposal to Promote Innovation and Job Creation by U.S. Research-Intensive Emerging Companies

One Time Refund of NOLs in Lieu of Other Tax Benefits to Sustain Critical R&D During Current Financial Downturn

Description: Allow companies to temporarily elect to receive a refund of their accumulated net operating losses (NOLs) at a discounted rate in lieu of claiming qualified research expenses, as defined by Code 41(b), for Tax Year 2008. The proposal would have the following features:

* Election to receive a refund of accrued NOLs at a discounted rate (i.e., 35% corporate tax minus a discount percentage).
* Refunds must be reinvested in investments that would qualify as U.S.-based research expenses under Code 41(b).
* Company would permanently forgo the opportunity to claim all NOLs involved in the computation of the refund.
* Applies only to loss companies in Tax Year 2008.
* Limited to small companies.
* Refund capped at a per company dollar amount.

Example: Assuming a discount percentage of 15%, a small neurotech/biotech/nanotech/cleantech company with $100M in accumulated NOLs could elect to claim a refund of $20M on their 2008 tax return ($100M x (35% - 15%) = $20M). The $20M refund could only be used to pay for U.S.-based research activities. The company would forgo the ability to carry forward the remaining $80M in NOLs for future tax years.

Rationale: Many of America's most promising companies in the areas of science and technology are struggling to raise the necessary research funding to survive the current economic slowdown and may disappear if economic conditions do not improve in the very near future. In order to save the high-paying, research-intensive jobs of America's innovation economy, Congress should allow companies to accelerate the utilization of their tax assets. Companies struggling to conduct capital-intensive R&D and meet payroll during the economic downturn will forgo a larger tax benefit in the future to claim a smaller tax benefit today. The proposal has minimum revenue impact since companies are only claiming accumulated NOLs at a substantial discount in return for forgoing the ability to claim remaining NOLs in future tax years.

As I mentioned recently in Forbes we need to act now to stem the loss of innovative neurotherapeutics. This proposal will greatly benefit emerging companies developing drugs, devices and diagnostics for the brain and nervous system who are currently struggling to raise the necessary research funding to survive the current economic downturn. Join us in Washington DC.