Print“By providing an incentive for investors to partner with a young research company, the Start-up Jobs and Innovation Act stimulates R&D; investment at the earliest, most-critical stages of a company’s research, writes BIO's Greenwood”
U.S. Senators Robert Menendez (D-New Jersey) and Pat Toomey (R-Pennsylvania) have introduced a bill that would change the U.S. tax code in the hopes of spurring investment in research and development at innovative companies that are not yet profitable. A follow up to the JOBS Act, which eased the path for emerging companies to go public, the Start-up Jobs and Innovation Act aims to stimulate the growth of small business innovation, which is seen as fundamental to the long-term growth of the country’s economy.
The new bill seeks to change the rules to allow startup companies to partner with their investors to conduct research through R&D partnership structures. Under these partnerships, investors will be able to realize the tax losses and credits generated by the startup’s R&D and benefit from a reduced capital gains rate, encouraging them to invest at an early critical juncture of a startup’s development when investment can be riskier.
The bill is backed by the Coalition of Small Business Innovators, which notes that small business innovation is fundamental to the long-term growth of the U.S. economy. The Biotechnology Industry Organization also threw its support behind the bill.
Jim Greenwood, president and CEO of BIO, in a letter thanking the senators for introducing the bill, said while it is not industry specific, it will invigorate biotech R&D investment. “By providing an incentive for investors to partner with a young research company, the Start-up Jobs and Innovation Act stimulates R&D investment at the earliest, most-critical stages of a company’s research,” Greenwood wrote.
Only startup and small companies dedicated to R&D would be eligible to use these partnerships. The bill includes reforms to the capital gains treatment of small business stock, increasing the size of qualified companies to $150 million in assets, up from $50 million. It also eases the rules for business expensing for growing companies, and the rules governing small firm accounting methods.
An independent study of the proposed R&D partnership structure found that it would create more than 150,000 additional jobs and spur increased investment by $10 billion a year.
November 08, 2013
http://www.burrillreport.com/article-new_senate_bill_could_be_boon_to_biotechs.html
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