The R&D Tax Credit Aspects of RepRap 3D Printers

Modern 3D printing has been decades in the making, but only in the past decade have we seen the proliferation of the technology into the hands of hobbyists, makers, and manufacturers. This has been due to several causes, primarily the reduction in price, and widespread availability of computing which can handle 3D modeling. Makers and small-scale manufacturers engaged in RepRap activates can utilize R&D Tax Credits for their product and design and process improvements, further adding to the value of in-house 3D printing. As the popularity of 3D printing for production rises, the combined benefits of self-assembly and low-cost replication can help provide immediate financial benefits as well as eligibility to capture tax incentives.

To truly understand the rise of 3D printing we need to go back several years, to 2004 at the University of Bath in the UK. There, Adrian Bowyer, a lecturer in the Mechanical Engineering department, founded the RepRap project, a portmanteau of “Replicating Rapid Prototyper”. Back then, 3D printing was still a little-used term, and the industry called it Rapid Prototyping because it wasn’t really cheap like printing, and the machines were expensive. However Bowyer felt that the technology was nearing an inflection point, and a replicating machine in the Von Neumann spirit could soon be a possibility. Moreover, in his essay “Wealth Without Money“, he outlined how open source and machine replication would enable new collaboration and lower-cost manufacturing of complex objects. RepRap, he felt, would be a small part of a larger ecosystem of open source tools that would blossom due to low-cost motion controls and symbiotic production. In 2006 the RepRap Darwin was released, which was one of the first designs to utilize 3D printed parts in its own construction. Later, in 2009, the Mendel was released with an improved ability to replicate, and in combination with improved software and electronics, the open source 3D printing community began to flourish. As of this writing in 2017 the RepRap heritage is strong. Companies such as LulzBot and Prusa Research use farms of 3D printers to produce their desktop 3D printers.

Replicating Rapid Prototyping and a Virtuous Cycle of Self-Improvement

When the RepRap project began, it was almost by necessity that the machines were required to self-improve. Several limitations in path planning and motion control at the time had limited the performance and reliability of the machines. Prints were slow, and the generated GCode often had incorrect interpretations of extrusion profiles and volumetric controls. The machines were not yet pushed to their limits. Once improved motion control software such as Sprinter and Marlin, and path planners such as Slic3r and Cura, became available, the machines began to get pushed to their mechanical limits. Likewise, the reliability of prints also improved and the RepRap project saw a new population bottleneck emerge in a Darwinian fashion.

The old guard consisted of printers with large hardware counts and an emphasis on simple part designs for 3D printing. With overall improved software and reliability, RepRap designers began to place an emphasis on quick assembly and low cost. Websites such as Thingiverse and GitHub helped users collaborate and share new and improved components. One of the first and most successful printers in this spirit is the Prusa Mendel which is notable as it reduced the hardware count of the RepRap project’s Mendel by merging several 3D printed parts at the expense of complexity, which by nature is mostly free on a 3D printer. The Prusa Mendel emerged as a leader in the latest generation of RepRaps, and has become by far the most replicated and modified design of the past five years. Several new designs can be assembled in just a few hours, making them a great value for budget- and time-conscious companies.

However the first five years of the RepRap project hardly resemble those of the last five. A split in consensus has occurred over the pursuit of a “universal replicator”, that is, a single machine with self-replicating capability. In the waning days of the RepRap Core Developer group, Adrian Bowyer concluded the RepRap project would possibly resemble a “RepRap Lab”, where machines can symbiotically reproduce and demonstrate specialization similar to natural systems. Some developers continue to pursue the RepRap ideal, however the dominating idea of the present is that accuracy and ease-of-use are the most desirable qualities of a 3D printer, at the expense of reproducibility. Hundreds of open source 3D printer designs are available which can provide varying build dimensions, speeds, and reproduction costs.

The Research & Development Tax Credit

Enacted in 1981, the federal Research and Development (R&D) Tax Credit allows a credit of up to 13 percent 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 and startup businesses can utilize the credit against $250,000 per year in payroll taxes.

The Economic Sense of RepRaps for Small-Scale Production

In general 3D printing is a complementary technology to otherwise traditional production methods such as injection molding. Startups and small-scale manufacturers may use 3D printing for their initial product releases to cut down time to market. Several service providers are available, but the production markups can be prohibitive to margins over a production run. In addition, without an in-house 3D printer, the speed of prototypical production is significantly reduced. In addition, a custom made 3D printer may allow a company to create a build area or nozzle resolution specific to their production needs. Thus, many startups may consider 3D printing for early prototypes and production runs at an ever increasing rate to minimize upfront capital expenditures and associated risks.

However the question of value between do-it-your-self assembly and pre-assembled printers remains. Small-scale manufacturers that use 3D printing can leverage additional tax incentives that may influence their financial decision making. R&D Tax Credits can help recover costs associated with the development and commissioning of new machines on their production line. For example, a company using RepRaps may be eligible for tax credits for initial prototypes assembled in-house. Similarly, those machines assembled from open source plans have demonstrable process of experimentation and consideration of alternatives, key aspects of qualifying for the R&D Tax Credit. Machines assembled internally may be more cost effective for certain companies if they are constrained on available funds.

LulzBot and Prusa Research are two of the largest 3D printer manufacturers that use 3D printing on their own assembly lines, with each operating over 100 printers 24 hours a day, 7 days a week. For companies that sell 3D printers, such a production method serves to provide opportunities for stress testing and lifecycle analysis in-house while simultaneously generating profits from production. Companies that produce RepRaps for sale using other RepRaps can integrate additional R&D activities into their production processes to further reduce operational costs.

Conclusion

It is a powerful business resource when improvements in an underlying means of production can be used to replicate more improved products. The ability of 3D printers to self-replicate themselves is further enhanced by federal and state R&D Tax Credits.

Charles Goulding and Jacob Goldman of R&D Tax Savers discuss RepRap 3D printing