Why Start-ups ?

The prototypical start-up involves an employee leaving her job with an idea and selling a portion of that idea to a venture capitalist. In many respects, however, the idea should be worth more to the former employer. The former employer can be expected to have better information concerning the employee-entrepreneur and the technology, have opportunities to capture economies of scale and scope not available to a venture capital-backed start-up, and will receive more favorable tax treatment than the start-up should the innovation fail. In connection with an auction of the idea, the former employer should have both a more accurate estimate of its value and receive an element of private value not available to the venture capitalist. In turn, this should give rise to a powerful winner\u27s curse: each time a venture capitalist wins the auction, it will have paid more than a party that has better information and receives an element of private value. The puzzle, then, is why do we ever observe start-ups? Professors Joseph Bankman and Ronald J. Gilson suggest three interrelated explanations. First, the venture capitalist may have superior information with respect to some subset of employee innovations. Second, employer bids on employee innovation can create an incentive for employees to establish internal property rights in their research efforts that may reduce the future output of the employer\u27s research and development efforts. Finally, employees are not homogenous. The attractiveness of venture capital financing depends critically on employee personal characteristics, such as risk aversion. The employer sets the internal payoff to discovery – its bid – to equalize the marginal benefit of retaining employees who might otherwise leave to the marginal cost of establishing unfavorable incentives for future research and development for those employees who do not find venture capital financing a close substitute for continued employment. In some cases, this calculus might lead to a no bid policy. In virtually all cases, the pay-off will be set too loll to retain all employees, and start-ups ensue

State Responses to Federal Tax Reform: Charitable Tax Credits

This paper summarizes the current federal income tax treatment of charitable contributions where the gift entitles the donor to a state tax credit. Such credits are very common and are used by the states to encourage private donations to a wide range of activities, including natural resource preservation through conservation easements, private school tuition scholarship programs, financial aid for college-bound children from low-income households, shelters for victims of domestic violence, and numerous other state-supported programs. Under these programs, taxpayers receive tax credits for donations to governments, government-created funds, and nonprofits. A central federal income tax question raised by these donations is whether the donor must reduce the amount of the charitable contribution deduction claimed on her federal income tax return by the value of state tax benefits generated by the gift. Under current law, expressed through both court opinions and rulings from the Internal Revenue Service, the amount of the donor’s charitable contribution deduction is not reduced by the value of state tax benefits. The effect of this Full Deduction Rule is that a taxpayer can reduce her state tax liability by making a charitable contribution that is deductible on her federal income tax return. In a tax system where both charitable contributions and state/local taxes are deductible, the ability to reduce state tax liabilities via charitable contributions confers no particular federal tax advantage. However, in a tax system where charitable contributions are deductible but state/local taxes are not, it may be possible for states to provide their residents a means of preserving the effects of a state/local tax deduction, at least in part, by granting a charitable tax credit for federally deductible gifts, including gifts to the state or one of its political subdivisions. In light of recent federal legislation further limiting the deductibility of state and local taxes, states may expand their use of charitable tax credits in this manner, focusing new attention on the legal underpinnings of the Full Deduction Rule. The Full Deduction Rule has been applied to credits that completely offset the pre-tax cost of the contribution. In most cases, however, the state credits offset less than 100% of the cost. We believe that, at least in this latter and more typical set of cases, the Full Deduction Rule represents a correct and long-standing trans-substantive principle of federal tax law. According to judicial and administrative pronouncements issued over several decades, nonrefundable state tax credits are treated as a reduction or potential reduction of the credit recipient’s state tax liability rather than as a receipt of money, property, contribution to capital, or other item of gross income. The Full Deduction Rule is also supported by a host of policy considerations, including federal respect for state initiatives and allocation of tax liabilities, and near-insuperable administrative burdens posed by alternative rules. It is possible to devise alternatives to the Full Deduction Rule that would require donors to reduce the amount of their charitable contribution deductions by some or all of the federal, state, or local tax benefits generated by making a gift. Whether those alternatives could be accomplished administratively or would require legislation depends on the details of any such proposal. We believe that Congress is best situated to balance the many competing interests that changes to current law would necessarily implicate. We also caution Congress that a legislative override of the Full Deduction Rule would raise significant administrability concerns and would implicate important federalism values. Congress should tread carefully if it seeks to alter the Full Deduction Rule by statute

Caveat IRS: Problems with Abandoning the Full Deduction Rule

Several states have passed — and many more are considering — new tax credits that would reduce tax liability based on donations made by a taxpayer in support of various state, local or non-profit programs. In general, taxpayer contributions to qualifying organizations — including public charities and private foundations, as well as federal, state, local, and tribal governments — are eligible for the federal charitable contribution deduction under section 170. In a previous article, we explained how current law supports the view that qualifying charitable contributions are deductible under section 170, even when the donor derives some federal or state tax benefit by making the donation. We referred to this treatment as the “full deduction rule.” Some commentators have suggested that Treasury and the IRS could change existing law, whether through new regulations or by issuing a new interpretation of existing regulations, to limit the deductibility of taxpayer contributions when they trigger a state or local tax benefit to the donor. Many legal and administrative concerns are associated with those actions. In this report, we argue that even if the IRS has the legal authority to implement the changes absent new legislation, it should decline to do so

Lidar System Model for Use With Path Obscurants and Experimental Validation

When lidar pulses travel through a short path that includes a relatively high concentration of aerosols, scattering phenomena can alter the power and temporal properties of the pulses significantly, causing undesirable effects in the received pulse. In many applications the design of the lidar transmitter and receiver must consider adverse environmental aerosol conditions to ensure the desired performance. We present an analytical model of lidar system operation when the optical path includes aerosols for use in support of instrument design, simulations, and system evaluation. The model considers an optical path terminated with a solid object, although it can also be applied, with minor modifications, to cases where the expected backscatter occurs from nonsolid objects. The optical path aerosols are characterized by their attenuation and backscatter coefficients derived by the Mie theory from the concentration and particle size distribution of the aerosol. Other inputs include the lidar system parameters and instrument response function, and the model output is the time-resolved received pulse. The model is demonstrated and experimentally validated with military fog oil smoke for short ranges (several meters). The results are obtained with a lidar system operating at a wavelength of 0.905 μm within and outside the aerosol. The model goodness of fit is evaluated using the statistical coefficient of determination whose value ranged from 0.88 to 0.99 in this study

Brief of Interested Law Professors As \u3ci\u3eAmici Curiae\u3c/i\u3e Supporting Petitioner in \u3ci\u3eBrohl v. Direct Marketing Association\u3c/i\u3e

Amici curiae are 14 professors of law who have devoted much of their teaching and research to the area of state taxes and the role of state tax policy in our federal system. The names and affiliations (for identification purposes only) of amici are included in an addendum to this brief. The amici are concerned with the effect of this Court’s dormant Commerce Clause jurisprudence on the development of fair and efficient state tax systems. No decision of this Court has had more effect on state sales and use tax systems than Quill Corporation v. North Dakota. We believe the Tenth Circuit properly decided the case below. But if the Court decides to grant the Direct Marketing Association’s petition to review the issue of discrimination which it raises, we respectfully request that the Court also grant the conditional crosspetition filed by Executive Director Barbara J. Brohl of the Colorado Department of Revenue asking the Court to reconsider Quill. This brief sets forth the reasons for our support of that cross-petitio

Methods for the analysis of ordinal response data in medical image quality assessment.

The assessment of image quality in medical imaging often requires observers to rate images for some metric or detectability task. These subjective results are used in optimisation, radiation dose reduction or system comparison studies and may be compared to objective measures from a computer vision algorithm performing the same task. One popular scoring approach is to use a Likert scale, then assign consecutive numbers to the categories. The mean of these response values is then taken and used for comparison with the objective or second subjective response. Agreement is often assessed using correlation coefficients. We highlight a number of weaknesses in this common approach, including inappropriate analyses of ordinal data, and the inability to properly account for correlations caused by repeated images or observers. We suggest alternative data collection and analysis techniques such as amendments to the scale and multilevel proportional odds models. We detail the suitability of each approach depending upon the data structure and demonstrate each method using a medical imaging example. Whilst others have raised some of these issues, we evaluated the entire study from data collection to analysis, suggested sources for software and further reading, and provided a checklist plus flowchart, for use with any ordinal data. We hope that raised awareness of the limitations of the current approaches will encourage greater method consideration and the utilisation of a more appropriate analysis. More accurate comparisons between measures in medical imaging will lead to a more robust contribution to the imaging literature and ultimately improved patient care

Multisensory information facilitates reaction speed by enlarging activity difference between superior colliculus hemispheres in rats

Animals can make faster behavioral responses to multisensory stimuli than to unisensory stimuli. The superior colliculus (SC), which receives multiple inputs from different sensory modalities, is considered to be involved in the initiation of motor responses. However, the mechanism by which multisensory information facilitates motor responses is not yet understood. Here, we demonstrate that multisensory information modulates competition among SC neurons to elicit faster responses. We conducted multiunit recordings from the SC of rats performing a two-alternative spatial discrimination task using auditory and/or visual stimuli. We found that a large population of SC neurons showed direction-selective activity before the onset of movement in response to the stimuli irrespective of stimulation modality. Trial-by-trial correlation analysis showed that the premovement activity of many SC neurons increased with faster reaction speed for the contraversive movement, whereas the premovement activity of another population of neurons decreased with faster reaction speed for the ipsiversive movement. When visual and auditory stimuli were presented simultaneously, the premovement activity of a population of neurons for the contraversive movement was enhanced, whereas the premovement activity of another population of neurons for the ipsiversive movement was depressed. Unilateral inactivation of SC using muscimol prolonged reaction times of contraversive movements, but it shortened those of ipsiversive movements. These findings suggest that the difference in activity between the SC hemispheres regulates the reaction speed of motor responses, and multisensory information enlarges the activity difference resulting in faster responses

Improvement for detection of microcalcifications through clustering algorithms and artificial neural networks

A new method for detecting microcalcifications in regions of interest (ROIs) extracted from digitized mammograms is proposed. The top-hat transform is a technique based on mathematical morphology operations and, in this paper, is used to perform contrast enhancement of the mi-crocalcifications. To improve microcalcification detection, a novel image sub-segmentation approach based on the possibilistic fuzzy c-means algorithm is used. From the original ROIs, window-based features, such as the mean and standard deviation, were extracted; these features were used as an input vector in a classifier. The classifier is based on an artificial neural network to identify patterns belonging to microcalcifications and healthy tissue. Our results show that the proposed method is a good alternative for automatically detecting microcalcifications, because this stage is an important part of early breast cancer detectio