🏦 Washington Wants to Tax Despite No Profit
Plus: IRS AI Surveillance, World’s First AI Gene Editor, and More
This week’s market, investing, and business insights from insiders and experts outside the mainstream media:
Small businesses have to spread R&D expenses over 5 years.
First company to successfully use AI to edit human cell DNA.
DOD racing to develop defense against drone swarms.
IRS's use of AI for citizen financial surveillance.
Google Cloud is leading the charge in bringing AI to restaurants.
And more…Let’s get to it!
Top 5 Insights of the Week
1. 🏦 Washington Wants to Tax Despite No Profit
Small businesses have to spread R&D expenses over 5 years–due to 2017 Tax Cuts and Jobs Act provision.
E.g. before, you made $500k and spent it all on R&D, the entire amount was tax-exempt. Now, despite no profit, you’ll be taxed on $400k.
House bill to reverse changes stalled in Senate over disagreements on other agendas like child tax credit extension.
2. 🧬 World’s First AI Gene Editor
Profluent, first company to successfully use AI to edit human cell DNA.
AI model made millions of new CRISPR-like proteins not found in nature.
Could lead to cures for thousands of currently incurable genetic diseases.
Global CRISPR gene editing market is projected to grow from $1.89B in 2022 to $15.80B by 2031.
3. 🤖 The Threat of Drone Swarms
DOD racing to develop defense against drone swarms; "one of the top threats" -U.S. Central Command.
Epirus developed the first long-range EMP weapon that uses machine learning to disable drones and missiles.
DOD awarded Epirus a $66 million contract to develop similar defense systems.
DOD allocates ~$1B to build thousands of self-operating systems over the next 18-24 months.
4. 👀 IRS AI Surveillance
GOP members question IRS's use of AI for citizen financial surveillance.
IRS's official criticizes AI targeting small individuals' bank accounts, possibly violating rights.
In 2023, Supreme Court ruled the IRS can access bank records without notification, only for tax debt collection, sparking privacy concerns.
IRS recovered $375 million in fiscal 2023 with the help of AI.
5. 🍔 Google's Restaurant Play
Google Cloud is leading the charge in bringing AI to restaurants.
Restaurants piloting Google Cloud’s AI: Wendy's; using FreshAI to automate drive-thru orders. McDonald's; to improve customer service. Yum! Brands; to upsell. IHOP; for personalized recommendations. Papa Johns, Checkers & Rally's, Krystal, Hardee's, and more.
Access to the same machine learning models that power Google Ads, Search, and YouTube.
Q4 2023: Google Cloud hit a record profit of $864M. Q1 2024: Revenue jumped to $9.57B, up 28%.
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Top 3 Charts of the Week
1. 🍞 Uncrustables Approaches $1B
Smucker’s Uncrustables sales nearly doubled since 2019, reaching ~$700M last year.
Prompting a ~$1B factory construction to meet demand.
Celebrity endorsements and social media boost Smucker’s success. Potential to become a billion-dollar business by 2026.
Originally acquired from two North Dakota dads for $1M.
2. 🔻 U.S. Imports from China Decreasing
China shifting manufacturing to Mexico, known as "nearshoring," gains momentum.
Nearshoring saves on shipping and evades up to 25% tariffs on US sales.
U.S. imports from China plunged to $32B in Feb. Mexico surged to $40B—both China/Mexico benefit.
3. 💵 Want a Pay Raise? Change Jobs
FTC bans non-compete agreements in 3-2 vote—affects 1 in 5 American workers.
Ban could raise average employee earnings by $524 per year and increase startups.
Atlanta Fed data: employees who switch jobs see bigger pay bumps within a year than those who stay.
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