Collecting Big Data Footprints

May 23rd, 2016 | Posted by Sarah Jones in Guest Blogs | Member Blog Posts - (Comments Off)

This week on NVTC’s blog, the Virginia Commonwealth University School of Engineering shares research on Big Data footprints that the Electrical and Computer Engineering Department is working on with the Huazhong University of Science and Technology.


vcublogXubin He, Ph.D., professor and graduate program director of the Virginia Commonwealth University School of Engineering Electrical and Computer Engineering department, is working with Huazhong University of Science and Technology (HUST) to establish an international research institute focused on creating design techniques to improve data reliability and performance. Coordination efforts are currently underway to create rotation periods for students from VCU and HUST to conduct research within each university’s state-of-the art laboratories.

“This next step in our partnership with VCU helps both universities attract more high-quality research students, while enhancing the breadth and depth of our research,” said Dan Feng, Ph.D. and dean of the School of Computer Science and Technology at HUST. Feng also serves as director of the Data Storage and Application lab at HUST.

Managing big data

Data storage is a booming industry, with lots of opportunities. Just a decade ago, computational speed dominated research efforts and water cooler conversations. According to He, data is more important now. “Data empowers decision-making and drives business progress. No one can tolerate data loss, whether that data represents favorite photos or industry trends and analytics,” added He. And yet, trying to increase data capacity or replace obsolete data systems can shut down vital data centers for days.

Research teams from both universities find creative solutions to global data pain points. For example, these collaborative research teams reduced overhead costs associated with data failures by up to 30 percent. Their algorithms allow businesses to encode data that can be easily retrieved, instead of having to rely on costly data copies or redundant data centers.

Currently, in addition to HUST, He’s team also works with top data storage companies such as EMC, which ranks 128 in the Fortune 500 and had reported revenues of $24.4 billion in 2014.

The network effect

He has a simple philosophy to gauge the success of university research efforts — he looks at who else is there. “At top data storage and systems events such as USENIX’s File and Storage Technologies conference and USENIX’s Annual Technical conference, we’re presenting with peers from Harvard, MIT, Princeton and other premier universities we admire,” said He. These conferences typically accept about 30 presentation papers — that’s less than 20 percent of the global submissions they receive.

“Professor He’s leadership represents one of many efforts to build our international reputation in industry and academia,” said Erdem Topsakal, Ph.D. and chair of the Department of Electrical and Computer Engineering. “HUST is ranked 19 on the U.S. News World & Report’s Best Global Universities for Engineering list. When leading universities like HUST want to work closely with you, you know you’re doing something right.”

For more news from the Virginia Commonwealth University School of Engineering, click here.

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John Wood of Telos Corporation provides an inside look into the Virginia Cyber Security Commission, established by Gov. Terry McAuliffe in 2014.


Shortly after taking office in 2014, Gov. Terry McAuliffe signed an Executive Order establishing the Virginia Cyber Security Commission “to bring public and private sector experts together to make recommendations on how to make Virginia the national leader in cyber security.”  It was my privilege to serve as a member of the Virginia Cyber Security Commission for the past two years, and I want to commend my fellow commissioners for their contributions, particularly Co-Chairs Richard Clarke and Secretary of Technology Karen Jackson, as well as our executive director, Rear Adm. Bob Day (Ret.).  With the Commission’s two-year authority ending this spring, it’s a good time to look back on what was accomplished and to see what’s next.

Being on the Commission was an eye-opener in many ways. The Commonwealth faces numerous and evolving challenges in the battle to secure state and local government networks, and to help protect the private sector and citizens of Virginia.  I was incredibly impressed with how open and honest our discussions were as we explored many complex issues.  This includes not only commissioners but the Governor’s appointees and other state employees who were party to our discussions – they were remarkably candid with us about the serious threats Virginia faces in cyber space and what actions are needed. We heard from and worked with representatives from state and federal law enforcement, the Virginia chief information officer, and other state government information security professionals. It was refreshing to hear such blunt assessments of our vulnerabilities – there was no “bureaucratic” caution, probably because the threat is so real and so immediate.

The Commission served to shine a bright light on the challenges facing Virginia. We made a number of recommendations that led to subsequent actions by the Governor and General Assembly, improving Virginia’s cyber security posture.  Moreover, our activities have better positioned Virginia’s cyber security sector to be a vibrant national leader. These results are consistent with the Governor’s desire to “grow this key industry, keep Virginia’s cyber assets safe and create new, good jobs here in the Commonwealth.” 

I urge everyone to read the report issued last summer by the Commission.  It notes some of the recommendations that were already accepted by the Governor and adopted by the General Assembly, such as new laws to help prosecute cyber crime and put in place other policies to better protect Virginians.  More importantly, the report raises a number of issues that require further work.  The effort must continue – there is much to be done, and Virginia’s public and private sectors must continuously work together to illuminate the changing threats we face and to swiftly take appropriate actions to address them.

It was gratifying to see how easy it is to get things done when people work together to find consensus.  The Commission explored problems and made recommendations, and the Governor and General Assembly took action.  That’s the way government is supposed to work.

At the same time, I saw how difficult it is to get things accomplished when competing agendas battle for the same limited pool of resources. That was my biggest disappointment.  In our report, we identified a real need for dedicated funding to promote collaborative cyber security research and development between the higher education community and private sector. That course was endorsed by the members of the General Assembly’s own Joint Commission on Technology & Science (JCOTS), which recommended $5 million to fund this effort. But this bi-partisan recommendation was set aside in Richmond, at least for now, because there were simply too many R&D agendas fighting for the same pool of money and attention.  I am hopeful the Governor and General Assembly will return to this because I firmly believe, as do many of my fellow Commissioners and the members of JCOTS, that collaborative R&D will be a key element in our drive to grow the industry and make Virginia THE leader in cyber security.

One final note: cyber security does not recognize man-made, political boundaries.  In that light, we in the technology sector should be looking at where other companies and other states are making investments (like in R&D), and see where we might do the same. Similarly, I hope the Commission’s work will set an example for other states, and help to chart a path for Gov. McAuliffe to pursue greater cooperation among the states.  I know he is interested in making intrastate and interstate cyber security a major focus during his upcoming term as chairman of the National Governors Association, and Virginia’s cyber security leaders in the private sector should support his efforts in any way we can.

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Kristin D’Amore of Dovel Technologies provides a look into how Virginia is supporting student innovation, an essential asset to the Commonwealth’s economy.


New businesses account for nearly all net new job creation and almost 20 percent of gross job creation as well as being responsible for a disproportionate share of innovative activity in the United States.* There is an enormous amount of entrepreneurial activity occurring at institutions of higher learning throughout the country, and Virginia is taking strides to strengthen student innovation on its campuses. On April 14, 2016, Governor Terry McAuliffe signed into law legislation that directs the Boards of Visitors of public colleges and universities to adopt intellectual property (IP) policies that are supportive of student entrepreneurship. The legislation, which was sponsored by Del. Charniele Herring, was supported by NVTC and a broad coalition of higher education and business community organizations across Virginia.

The legislation reduces some barriers to entry for student entrepreneurs by clarifying existing university IP policies to specify the conditions under which institutions of higher education own intellectual property as opposed to student ownership. Current policies at some institutions of higher education create uncertainty about IP ownership, which discourages students from launching new ventures, starting businesses, or commercializing research based on their own ideas. The bill encourages a campus culture that supports entrepreneurship and motivates Virginia’s universities to be hubs of creativity and innovation with the potential to drive regional economic growth through research commercialization and new business formation.

The issue of student entrepreneurship and IP rights was raised by the Governor’s Council on Youth Entrepreneurship, which was formed in August 2015 to study and recommend ways to support young business owners and innovators in the Commonwealth. The group is comprised of leaders in higher education, business, innovators and entrepreneurs. As a member of the Council, I was pleased to see an early win for young entrepreneurs and students across Virginia.

Increased student innovation and promoting IP commercialization and new patents by students is critical to growing Virginia’s economy.  Statistics from the Council on Virginia’s Future show that although Virginia’s rate of patent formation has improved in recent years, it is still well below the U.S. average. Furthermore, Virginia universities generated 1.94 startups per one million residents in 2013, measurably below the national rate of 2.38 startups and ranking the Commonwealth 27th in the country.

The Council on Youth Entrepreneurship is continuing its efforts assessing resources and opportunities in Virginia for young entrepreneurs and will be presenting additional recommendations to the Governor later this year.  The Council will make additional recommendations on areas including financial incentives for business formation, improving regulatory processes for entrepreneurs, strengthening academic programs for student innovators in K – 12 and higher education, and marketing the assets of Virginia’s education system to students, faculty, and business leaders across the country.  The Council’s efforts are focused on providing the next generation of entrepreneurs and innovators a solid foundation from which to launch their ideas, ultimately leading to further growth in the economy.

* According to the Kauffman Foundation, the largest foundation in the world devoted to entrepreneurship.

Kristin D’Amore is Director, Market Development and Strategy at Dovel Technologies and a member of Governor McAuliffe’s Council on Youth Entrepreneurship. 

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Bitcoin: What are the U.S. Tax Implications?

May 26th, 2015 | Posted by Sarah Jones in Guest Blogs - (Comments Off)

Although many critics are already considering Bitcoin irrelevant or even dead, technology behind Bitcoin is here to stay. This week on NVTC’s blog, John Calanog of member company CohnReznick LLP discusses the basic U.S. tax implications of using the Bitcoin currency.


In my first blog on the subject, I described Bitcoin and its increasing popularity as an alternative currency.  As the digital currency is becoming more and more prevalent in the marketplace, and for those already exchanging Bitcoins, the following article discusses the basic U.S. tax implications of using the currency. Although there may also be Foreign Bank and Financial Accounts (“FBAR”) and Foreign Account Tax Compliance Act (“FATCA”) compliance requirements, that is not covered in this blog.

What is the U.S. Taxation?

On March 25, 2014, the IRS released guidance in Notice 2014-21 explaining that Bitcoin would be treated as “property” and not as “currency” for federal income tax purposes.  From a practical standpoint, this means that gains and losses on the disposition of Bitcoin will not be treated as “exchange gain or loss” and will not be ordinary in character.  This is bad news for investors who hold depreciated Bitcoin and were hoping to take exchange losses as ordinary losses. However, it is good news for investors who hold appreciated Bitcoin and prefer capital gains treatment.

For those holding Bitcoin for sale in a trade or business (i.e., for “miners”  [1] and “dealers”), income resulting from the sale of such Bitcoin may be taxed as ordinary income.  However, for most investors who merely “trade” in Bitcoin, gains or losses will likely be capital and not ordinary.

From a tax compliance standpoint, the taxpayer has the burden of keeping a record of their tax basis in the Bitcoin and determining the fair market value of the Bitcoin at the time they seek to sell or otherwise dispose of it.  Fortunately, most exchanges and e-wallets have been implementing tools that enable customers to receive the needed documentation.  Still, users without any obtainable records should seek professional tax advice as they are likely going to need to estimate their tax liability from the records they do have on file.

Virtual Currency as Net Earnings from Self-Employment

A taxpayer who receives virtual currency, such as Bitcoin, as payment for services has gross income equal to the fair market value (“FMV”) of the currency, in U.S. dollars, as of the date of receipt.

Moreover, an independent contractor who receives virtual currency for performing services has self-employment income.  The amount of the income is the FMV of the currency, in U.S. dollars, as of the date of receipt.

If a taxpayer’s “mining” of virtual currency is a trade or business and is not undertaken as an employee, the net earnings from self-employment from that activity is treated as self-employment income.

Additional Tax Considerations

There may also be filing FinCEN Form 114, Report of Foreign Bank and Financial Accounts, (FBAR) or Foreign Account Tax Compliance Act (FATCA) reporting requirements.  However, that is beyond the scope of this blog.

Conclusion

Bitcoin has only been around for six years (since 2009) and many critics are already considering it irrelevant or even dead.  However, such pessimism is missing the point.  The technology behind Bitcoin is here to stay.  And that technology is likely to become more significant as developers create new and improved versions.

With the IRS issuing a Notice to give guidance for the tax treatment of this means of exchange suggests that Bitcoin is a real and lasting phenomenon. Technology companies and others using the Internet will need to deal with it in the future.  Our monetary system was not originally designed for the internet or for globalized trading.  This is where Bitcoin comes in – as a truly globalized currency.

_________________________________________________________________________________

The content of this article is intended to provide a general commentary on the subject.  Please seek the advice of a tax professional regarding your specific circumstances.

John Calanog, CPA, is a Tax Manager with CohnReznick LLP and is a member of the Firm’s Technology Industry Practice.  John’s experiences over the last fifteen years include U.S. tax compliance and consulting for C Corporations, S Corporations, Partnerships, and high net worth individuals who operate businesses in a wide variety of industries and taxing jurisdictions.  Contact John at john.calanog@cohnreznick.com. Follow CohnReznick’s Technology Practice on Twitter via @CR_TechInd


[1]Mining is the verification process of running mathematical operations on digital data in order to validate transactions and provide the requisite security for the public ledger of the Bitcoin network. The speed at which you mine is measured in hashes per second.

The Bitcoin network compensates “miners” for their effort by releasing Bitcoin to those who contribute the needed computational power. This comes in the form of both newly issued coin and from the transaction fees included in the transactions they validate when mining. The more computing power that is contributed, the greater their share of the reward.

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