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

Post by walterbell » Sat, Jun 07, 2025, 5:16 AM UTC

nickff wrote: post #30

walterbell wrote: post #26

Earlier quoted context omitted.

> op-ex becomes capex i.e. some humans get the same tax treatment as humanoid robots, while LLMs ("AI") are always deductible as op-ex, regardless of function. Draft 2025 spending bill in Congress would revert Section 174 changes for 2026-2029.

Only external LLM use is ‘always deductable as op-ex’. If you build your own server farm and/or developer your own LLM, those are capital expenses which must be depreciated.

Post by notimetorelax » Sat, Jun 07, 2025, 5:23 AM UTC

gscott wrote: post #452

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…

I thought wages were deductible anyway. Say you pay a developer $250,000 a year. The employee pays the tax on their own wages.

Post by joshdavham » Sat, Jun 07, 2025, 5:27 AM UTC

anymouse123456 wrote: post #483

There is definitely a lot of misunderstanding here. This provision can and does lead companies to owe significantly more in taxes than they make. The only reason it hasn't been bigger news, is because most companies are pretending it doesn't exist and just sweeping it under the rug, hoping it will get fixed before enforcement gets serious.

Post by rat9988 » Sat, Jun 07, 2025, 5:32 AM UTC

edflsafoiewq wrote: post #488

bjt wrote: post #443

Earlier quoted context omitted.

Or are cynical Americans living in an alternate world, blind to how much better the rule of law is here than most other countries? The commenter's comparison was to Russia. When was the last time Putin lost an election? I'd say we're slightly behind western Europe as far as rule of law goes, not really sure about the advanced east (Japan, Korea), and miles ahead of just about everywhere else (eastern Europe, Russia,…

If you pursue excellence, you compare yourself against the best, not the worst.

Post by ajmurmann » Sat, Jun 07, 2025, 5:34 AM UTC

Braxton1980 wrote: post #462

formerly_proven wrote: post #284

Earlier quoted context omitted.

> 174 is so small it can't go through both chambers on its own so it needs to get attached a larger bill like OBBA. There's a minimum size for laws?

Why would a senator from Kentucky vote for a bill that doesn't benefit his state to a meaningful amount?