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

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

#201

Post by PaulDavisThe1st »

thinkerswell wrote: post #197
PaulDavisThe1st wrote: post #132

Earlier quoted context omitted.

These changes came about as part of the Trump administration & Republican efforts to reduce taxation. Because you can't trivially just cut taxes (as was done in 2017) without showing how you will either make up the missing revenue or reduce spending, they threw in a time-deferred measure - the new Section 174 that "demonstrated" how the tax cuts in 2017 would be paid for in the future. It was all sleight of hand, but…

What the recent Argentinian president had proposed for his country would be a good start for the US

US voters have consistently rejected such policies for nearly a century, if not longer.

While there are certainly people who believe as you do, you are not in a majority. There are also a lot of people in Argentina (possibly a majority) who don't agree with those policies either.

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

#202

Post by icedchai »

mjwhansen wrote: post #138
gavinhoward wrote: post #108

This is exactly why I decided to not make my single-member, zero employee LLC an S Corp; if I'm paying no salaries, I don't have the Section 174 craziness. With an S Corp, you have to pay yourself a salary, and if your work is primarily software development, Section 174 might hit you. (IANAL or accountant. Talk to one of them.)

Unfortunately, this doesn’t erase the impact. This applies beyond salaries to all resources used for what 174 considers R&D. Servers, software, the desk chair you sit on to do development —- all have to be amortized under 174.

What if I'm doing mostly "maintenance and operations", not "R&D"? I still need those servers and software...

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

#203

Post by p_l »

spacecadet wrote: post #67
p_l wrote: post #34

Earlier quoted context omitted.

Salaries being amortized never made sense

Please explain then. Because if you spend $2m on an idea, layoff half the company, pivot to a new idea, rehire. You think it's fair on the rest of us you get to write that risk off? This. Is. Why. People. Hate. Tech.

Pretty much everyone else works on the idea that salaries are operational expenses and not subject to amortization.

I have yet to see any other case of salaries being turned into Capital Expenses (aka something that requires amortization/depreciation). I'd understand if outsourcing (or otherwise contract work) would be treated as something to be amortized, but we're talking SALARIES.

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

#204

Post by jjav »

moron4hire wrote: post #46
IndoCanada wrote: post #42

Earlier quoted context omitted.

But it is difficult to fire them which is a big problem for tech companies where hiring and firing are common

I hear this a lot and it's difficult to reconcile with my experience. Every US company I've worked at (and that's always been in at-will states) has not made it easy to get rid of people. Even people with woefully bad records of losing money every year and having multiple harassment complaints filed against them were kept for nearly a decade . With one exception (I personally got fired from a tiny startup because I r…

> Every US company I've worked at (and that's always been in at-will states) has not made it easy to get rid of people.

That's an internal choice they do, to avoid having a reputation of a company that fires people any second (but then you have companies like netflix which take pride in having that reputation, but make up for it by paying more).

However, it's very different from European companies where these processes are (often) driven by laws. In the US there are no employee protection laws (aside from protected classes) so even if the company has a rigorous internal process, they could at any second override it if someone high up says so and you'll be fired in the blink of an eye.

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

#205

Post by jjav »

addicted wrote: post #55
telesilla wrote: post #39

Take action and sign up for the Small Software Business Owners Association newsletter and petitions to the government: https://ssballiance.org/ Michele Hansen is doing an incredible job here and should be recognized for it. Latest news was sent yesterday: Republicans and Democrats finally struck a tax deal that includes a partial fix for Section 174. It includes expanding the Child Tax Credit, a key Democratic priori…

They’re calling this a business priority for the Republicans when it was a Republican House, Senate and President that passed this measure. That’s a bit too “must make it seem bipartisan” when there is a clear partisan direction. Even when this fix is passed, it will be voted for unanimously by Democrats and only a small fraction of Republicans will vote for it. Explain again to me how that makes it a Republican prio…

A lot of politics consists of quietly creating problems and then loudly coming in with tons of press coverage to solve it later so you look good and get reelected.

I wish there was a good way to prevent such behavior.

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

#206

Post by icedchai »

hobofan wrote: post #100
minton wrote: post #96

I’m confused why this is so impactful. If you have software devs, even if you don’t classify as R&D, you can deduct their full salaries, right?

How would you classify software _developers_ if not under Research & _Development_?

We'll call them "sustaining engineers" and define most features as "bug fixes." Problem solved.

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

#207

Post by nullc »

tchock23 wrote: post #175
nullc wrote: post #168

Earlier quoted context omitted.

> Even when this fix is passed, it will be voted for unanimously by Democrats and only a small fraction of Republicans will vote for it. Like the unanimous democrat vote to repeal the SALT limits that overwhelming impacts people in California and NY?

Nice whataboutism. What does that have to do with the topic at hand?

It's was part of the very same tax package and implemented for the same reason: It made the trump tax cuts look economically more reasonable by sticking in time delayed increases on tax burdens that would land on disproportionately on democrats. Yet democrats were unable to undo it because dem platform programs need the funding.

On what basis will it be different here? Dems are almost completely disengaged on the bill intended to fix this, almost all the activity for and against appears to be republicans.

Addicted's confident statement "Even when this fix is passed, it will be voted for unanimously by Democrats" seems misplaced and unlikely. If that were likely we would have seen broad dems support on fixing the SALT tax limits and we just didn't.

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

#208

Post by kolanos »

telesilla wrote: post #39

Take action and sign up for the Small Software Business Owners Association newsletter and petitions to the government: https://ssballiance.org/ Michele Hansen is doing an incredible job here and should be recognized for it. Latest news was sent yesterday: Republicans and Democrats finally struck a tax deal that includes a partial fix for Section 174. It includes expanding the Child Tax Credit, a key Democratic priori…

Thanks for sharing this, called my representatives.

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

#209

Post by eropple »

jodacola wrote: post #200

This is a topic about which I'm very passionate. I've written my congressional representatives several times. I've posted on LinkedIn. I'm raising awareness with my close colleagues. I'm trying to beat the drum as much as I can. There is a minor win that was just advanced in the House yesterday[0] to delay US onshore amortization through 2025 via The Tax Relief for American Families and Workers Act of 2024[1]. It doe…

> It's not enough. I was geared up to start a business this year; this, specifically, has put the brakes on it.

I've read a little about this, but not a lot. How has this put sufficient drag on starting a business that it's impractical to go from zero to one? Is there an aspect of the business model that's particularly impacted?

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

#210

Post by vlod »

Dalewyn wrote: post #109
telesilla wrote: post #39

Take action and sign up for the Small Software Business Owners Association newsletter and petitions to the government: https://ssballiance.org/ Michele Hansen is doing an incredible job here and should be recognized for it. Latest news was sent yesterday: Republicans and Democrats finally struck a tax deal that includes a partial fix for Section 174. It includes expanding the Child Tax Credit, a key Democratic priori…

>a script to follow Going on a tangent here, but I always hated this idea of reading off a script to try and lobby politicians. If I were the politician, I would ignore all such communiques as indoctrinated spam.

Good use of ChatGPT (to reword it).
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