Thousands of small businesses are struggling because of R&D amortization

Post by phkahler » Sat, Jan 20, 2024, 4:10 PM UTC

User23 wrote: post #54

kleinsch wrote: post #7

More detail with math here. Lawmakers are discussing delaying these changes for a few years and/or allowing deductions for domestic employees, but all depends on signing a budget, which is never certain. https://blog.pragmaticengineer.com/section-174/

So far as I can find the last time Congress bothered to pass a budget was 2016 with the prior one in 2010. The government has been funding itself instead with “continuing resolutions” which pretty much just continue spending as the prior year modulo marginal changes. Incidentally this is why federal deficits have exploded since 2010: the financial crisis “one time” trillion dollar stimulus has been continued every ye…

Post by the_mitsuhiko » Sat, Jan 20, 2024, 4:10 PM UTC

jdjskiaka wrote: post #38

the_mitsuhiko wrote: post #20

Since this is already hanging around for an entire tax year a lot of companies are 1/5th into that pain. If this does not get changed in the next few months it would not surprise me if this becomes the new norm. Which would also be quite interesting to see how that would play out. Some companies apparently have already been amortizing salaries for a while in anticipation of this (eg: Google). Given that this also gre…

> Some companies apparently have already been amortizing salaries for a while in anticipation of this (eg: Google) > Given that this also greatly punishes outsourcing Anyone help me understand these more? My understanding was that instead of deducting the costs of paying software devs the year it happened, it will be spread over 5 years. Which leads to a bigger tax bill now, and benefits bigger companies with deeper…

Post by cplusplusfellow » Sat, Jan 20, 2024, 4:18 PM UTC

User23 wrote: post #54

kleinsch wrote: post #7

More detail with math here. Lawmakers are discussing delaying these changes for a few years and/or allowing deductions for domestic employees, but all depends on signing a budget, which is never certain. https://blog.pragmaticengineer.com/section-174/

So far as I can find the last time Congress bothered to pass a budget was 2016 with the prior one in 2010. The government has been funding itself instead with “continuing resolutions” which pretty much just continue spending as the prior year modulo marginal changes. Incidentally this is why federal deficits have exploded since 2010: the financial crisis “one time” trillion dollar stimulus has been continued every ye…

Post by PaulDavisThe1st » Sat, Jan 20, 2024, 4:24 PM UTC

phkahler wrote: post #110

brianwawok wrote: post #76

Earlier quoted context omitted.

This isn’t like a loan where the longer the term the smaller the payments. It’s the reverse. You essentially pay taxes now on income, and can’t deduct costs for 5 or 15 years. So it’s kind of like pre-paying taxes and not getting the money back for 5/15 years. Say that you need to go borrow cash to cover the shortfall. Is it cheaper to borrow money for 5 or 15 years?

Hah I'm still trying to understand how software developer pay should be a deduction at all.

Post by PaulDavisThe1st » Sat, Jan 20, 2024, 4:27 PM UTC

mensetmanusman wrote: post #63

Any accidental policy that disincentivizes R&D is stupid, but par for the course in recent history for the U.S. Major materials innovations are discovered here, but the only nations that want to actually invest and build upon them are currently in Asia. The argument was that the US wants to transition away from building things towards building software which is more profitable, and then this... This is what happens w…