American Bicycle Group And 3D Printing

Charles R. Goulding goes on a 3D printing ride with the American Bicycle Group (ABG).

On Christmas EVE 2020 the New York Times selected five companies that have done well during the pandemic. I was glad to see that American Bicycle Group (ABG) of Chattanooga, Tennessee was one of them. ABG had peaked some years ago and, after a rough patch, has begun to rebound again.

The company has been using 3D printing for a long time. Back in 2012, Brian DeVaney, head of product development, talked about how 3D printing had helped the company benefit from rapid product development. The company obtained a $409,000 PPP loan and now has 67 employees, which is 30 more employees than the company had pre-pandemic.

Since the pandemic hit, bicycling has become a very popular recreational activity. Not only can 3D printing help to fulfill demand, but it can also improve the quality of the bicycle itself.

ABG’s Quintana Roo 2019 [Source: AeroGeeks]

Companies engaged in 3D printing activities and similar developments may be eligible for the Research and Development Tax Credit.


The Research & Development Tax Credit

Whether it’s used for creating and testing prototypes or for final production, 3D printing is a great indicator that R&D Credit eligible activities are taking place. Companies implementing this technology at any point should consider taking advantage of R&D Tax Credits.

Enacted in 1981, the now permanent Federal Research and Development (R&D) Tax Credit allows a credit that typically ranges from 4%-7% of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:

  • Must be technological in nature
  • Must be a component of the taxpayer’s business
  • Must represent R&D in the experimental sense and generally includes all such costs related to the development or improvement of a product or process
  • Must eliminate uncertainty through a process of experimentation that considers one or more alternatives

Eligible costs include US employee wages, cost of supplies consumed in the R&D process, cost of pre-production testing, US contract research expenses, and certain costs associated with developing a patent.

On December 18, 2015, President Obama signed the PATH Act, making the R&D Tax Credit permanent. Since 2016, the R&D credit has been used to offset Alternative Minimum Tax (AMT) for companies with revenue below $50MM and, startup businesses can obtain up to $250,000 per year in payroll tax cash rebates.

Conclusion

The ABG has demonstrated that the use of 3D printing can improve parts as well as business. There is a program that the Biden Administration might be formulating, a made in America opportunity, that ABG should be well-positioned for participating in.

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