Statutory Treatment of QRE(S) as Financial Assets: OPTIMIZATION of Public Law 95-507 -

• By using Public Law 95-507 (section 303(c)(1)), Ford Enterprises justifies treating QRE-heavy invoices as “equity-like” assets, aligning with federal authorities’ broader discretion for fair participation and capital support in small business operations.

• SMaRTi™ combines updated versions of the IRC and CFR—specifically IRC §41 (QRE scope), IRS §174 (R&D expense treatment), §6001 (recordkeeping), and certain CFR chapters on sustainability—within its algorithms and workflows for built-in, real-time compliance.

• Rather than bypassing tax law, SMaRTi™ leverages accounting design and automated compliance to improve the timing and certainty of benefits, staying fully compliant with §174 amortization while offering liquidity and timing advantages.

• All SMaRTi™-handled invoices, credits, and transfers are immutably recorded with cryptographic metadata, ensuring immediate IRS audit readiness and meeting the highest federal audit standards.

Real-Time, Dollar-for-Dollar Tax Credit Conversion: Immediate Liquidity,

No Aggregation or Year-End Lag Monetization Mechanism:

• Upon validation, SMaRTi™ applies the resulting tax credit directly to the invoicing record, creating a “direct pay” effect that reduces the company’s tax liability in real time—or, where applicable, converts excess into an immediate refund—without the delays of aggregation, carryforward, or annual settlement.

• Once an invoice’s QRE content is finalized, the corresponding value is credited against current tax obligations, releasing funds instantly for reinvestment in R&D or operational growth.

• Under the latest U.S. Treasury rules, unused credits are transferable or sellable, enhancing liquidity and eliminating the traditional “lock-up” risk of deferred tax assets.

• Tokenization through smart contracts and ledger entries ensures credits cannot be double-counted or misapplied, providing real-time assurance to regulators and stakeholders.

 

• By making each qualified dollar immediately reusable, companies improve both liquidity and creditworthiness, transforming deferred tax positions into tangible, on-demand operational capital.

Key Provisions Relevant to Asset Conversion

• Section 101 amends Section 303(c)(1) of the Small Business Investment Act, granting the SBA authority to purchase nonvoting stock or comparable corporate securities under defined conditions, including cumulative dividends, minimum par values, and investment limits tied to paid-in capital and surplus.

• Section 102 revises capital requirements, permitting investment companies to allocate idle funds into short-term U.S. obligations or insured certificates of deposit, thereby enhancing liquidity management.

Statutory Foundation Under Public Law 95-507

• Public Law 95-507 establishes the statutory basis enabling SMaRTi™ to reclassify operational expenditures as financial assets and enhance client capital structures.

• Equity Treatment Justification: Consistent with the SBA’s expanded equity authority under section 303(c)(1), SMaRTi™ designates qualified research expenses as equity-analogous assets within client capital frameworks.

• Capital Liquidity Optimization: The authorization to invest idle capital in short-term government obligations under section 308(b) aligns with SMaRTi™’s practice of converting operational outlays into immediately accessible tax credits, thereby increasing liquidity and mitigating tariff impacts.