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The time bomb in the tax code that's fueling mass tech layoffs

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Re: The time bomb in the tax code that's fueling mass tech layoffs

#361

Post by patmcc »

MattPalmer1086 wrote: post #136
wdaher wrote: post #56

Earlier quoted context omitted.

Here's a toy example that hopefully makes this clear: In 2024, your business has $1m in revenue and has $2m in expenses. 100% of these expenses are R&D salaries (engineers you hire.) Your company loses $1m/year. (You brought in $1m and spent $2m.) Under the old rules, you'd owe no tax because you were unprofitable. After Sec 174, what the IRS now says is: You had revenues of $1m. But you only had $400k in expenses (b…

Wait - they are saying that employee salaries are not expenses? That is surely wrong? Just because those salaries are for R&D? I could understand if there was some additional tax break for R&D which was being removed. I can't see how basic operating costs cease to be expenses.

They're still expenses, they just now need to be amortized.

Buying a truck is an expense, as is buying gas for the truck. But the former you have to amortize over x years, the latter you can expense immediately.

The law used to be "employee salaries for software are like buying gas" and now it's "employee salaries for software are like buying a truck".

Re: The time bomb in the tax code that's fueling mass tech layoffs

#362

Post by tomrod »

jmpetroske wrote: post #332
runako wrote: post #303

Earlier quoted context omitted.

Just last year, Congress snapped to attention and wrote and quickly passed a bill to ban the eminent national security threat of a video-sharing app. That bill doesn't do anything else. Just a reminder that Congress, even now, can rapidly act on a laser focus when it is sufficiently motivated.

Is the TikTok debacle not a way higher profile case?

I'm pretty sure that is precisely what GP referenced.

Re: The time bomb in the tax code that's fueling mass tech layoffs

#363

Post by adgjlsfhk1 »

_heimdall wrote: post #329
radley wrote: post #132

Earlier quoted context omitted.

It's not really targeted at tech, insomuch as at Democrats. Everyone assumed it was a traditional accounting hack. But given the timing and the reinitialization, it's clearly political, not economic. The code is a strategic time-bomb designed to cause a high-profile economic downturn during a presidential election cycle, specifically when the following president is a Democrat and Republicans have a house majority. It…

If this was passed in 2017 to go into effect during the next presidential term, wouldn't that only work as a time bomb for Biden's presidency if Trump didn't expect to win a second consecutive term? Given the history of prior presidents winning 2 consecutive terms, it seems like Trump could have reasonably expected a 2022/2023 tax change to be his problem.

if you retain power, you can fix it. the US government currently has the significant problem that one party campaigns on the government being dysfunctional, so they do their best to make it so.

Re: The time bomb in the tax code that's fueling mass tech layoffs

#364

Post by selimthegrim »

RankingMember wrote: post #357
trhway wrote: post #202

Earlier quoted context omitted.

What i like about US is that compare to other countries (like for example Russia where i'm originally from) there is almost no lying and cheating here. Instead there is a respect of the law and an army of talented creative accountants and lawyers. Remember that stale "multi-used" sandwich served with the drink which by virtue of its existence converted drinking establishment into a food serving restaurant? Not being…

> What i like about US is that compare to other countries (like for example Russia where i'm originally from) there is almost no lying and cheating here. Instead there is a respect of the law and an army of talented creative accountants and lawyers I thought you were being sarcastic here at first because, good lord, there is plenty of corruption here in the US (though those doing it used to care more about hiding it)…

You forgot putting a dead guy on trial.

Re: The time bomb in the tax code that's fueling mass tech layoffs

#366

Post by shepherdjerred »

yieldcrv wrote: post #270
gigatexal wrote: post #253

Earlier quoted context omitted.

This is a highlight in an otherwise shitty bill. I saw let Trump’s ugly bill die and then a small fix up to the tax code could be this. Should be able to pass.

This bill is goated for upper middle class and tech and defense sector And I’m tired of pretending like we aren’t going to be beneficiaries Every Congress increases the debt, we can acknowledge that the cuts they picked are going to wreck the lower class especially with the medicaid, we can acknowledge that it won’t meet its goals of cuts but are you guys just scared to acknowledge its going to super charge things th…

I don’t have to be in support of something just because it benefits me

Re: The time bomb in the tax code that's fueling mass tech layoffs

#367

Post by curtis3389 »

droopyEyelids wrote: post #346
demosthanos wrote: post #96

There are some misunderstandings in the comments that seem to stem from not having read the section, so I thought it was worth referencing the actual text [0]. It's quite short and easy to read. The most important bits: * Subsection (a) requires amortizing "Specified research or experimental expenditures" over 5 years (paragraph (2)) instead of deducting them (paragraph (1)) * Paragraph (c)(3) is a Special Rule that…

Who sponsored this text in the bill?

Here's the cosponsors of the bill:

https://www.congress.gov/bill/115th-congress/house-bill/1/co...

I think the purpose of the change was to "increase revenue":

> Requiring that certain research or experimental expenditures be amortized over a five-year period or longer, starting in 2023, would increase revenues by $109 billion over the period from 2023 to 2027.

https://www.congress.gov/congressional-report/115th-congress...

Re: The time bomb in the tax code that's fueling mass tech layoffs

#368

Post by MoonGhost »

RankingMember wrote: post #357
trhway wrote: post #202

Earlier quoted context omitted.

What i like about US is that compare to other countries (like for example Russia where i'm originally from) there is almost no lying and cheating here. Instead there is a respect of the law and an army of talented creative accountants and lawyers. Remember that stale "multi-used" sandwich served with the drink which by virtue of its existence converted drinking establishment into a food serving restaurant? Not being…

> What i like about US is that compare to other countries (like for example Russia where i'm originally from) there is almost no lying and cheating here. Instead there is a respect of the law and an army of talented creative accountants and lawyers I thought you were being sarcastic here at first because, good lord, there is plenty of corruption here in the US (though those doing it used to care more about hiding it)…

> I thought you were being sarcastic here at first because,

You've never been in Russia. There is no clear law abiding business there. That opens a lot of opportunities for those with some power. Corruption is one of them, selective punishment is another. I'm sure in most 3d world situation is not better, but they at least don't have laws to cheat and bribing isn't a crime.

Re: The time bomb in the tax code that's fueling mass tech layoffs

#369

Post by sandworm101 »

demosthanos wrote: post #96

There are some misunderstandings in the comments that seem to stem from not having read the section, so I thought it was worth referencing the actual text [0]. It's quite short and easy to read. The most important bits: * Subsection (a) requires amortizing "Specified research or experimental expenditures" over 5 years (paragraph (2)) instead of deducting them (paragraph (1)) * Paragraph (c)(3) is a Special Rule that…

But where an established company invests steadily in software, whether it is amoritized or deducted year to year is a wash. Rather than harm tech, this would seem to protect established US companies at the expense of startups. Thats probably great for shareholders in publicly traded companies. It seems just another querk of taxation meant to maintain the established order

Re: The time bomb in the tax code that's fueling mass tech layoffs

#370

Post by yieldcrv »

shepherdjerred wrote: post #366
yieldcrv wrote: post #270

Earlier quoted context omitted.

This bill is goated for upper middle class and tech and defense sector And I’m tired of pretending like we aren’t going to be beneficiaries Every Congress increases the debt, we can acknowledge that the cuts they picked are going to wreck the lower class especially with the medicaid, we can acknowledge that it won’t meet its goals of cuts but are you guys just scared to acknowledge its going to super charge things th…

I don’t have to be in support of something just because it benefits me

I am very much in support of Section 174A no matter who does it, what riders goes alongside it, or what it was a rider to

Congress can always pass anything else at any speed. This slow motion filibuster thing is a choice, and the powerlessness of doing anything about that choice just means everyone else should have a single they care about too to correct the laws and riders that shouldn’t have passed.

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