Can someone steelman the positives for me? I don't see how it's anything but pure regulatory capture favoring established tech firms. A small company ramping up revenue simply can't handle this amortization while a large, established company can. That being said, I do think there's a little sloppiness in what is categorized as "R&D" in the software development. Is code maintenance R&D? Bug fixes? Performance improvem…
Consider a different situation, a business pays employees to build a residential home for $275k total, the land is worth zero in this simple example. Currently they can deduct $10k a year for 27.5 years to depreciate the home, even though they paid $275k up front. Allowing the business to deduct the entire $275k at once, only recovering the difference when the depreciated asset is sold is basically a tax free loan at the expense of all other taxpayers.
To be fair there are many situations where the government wants to incentivize spending in certain areas. Certain types of businesses can avoid depreciation and deduct full expenses, like for farm equipment and heavy duty vehicles, previously most R&D. Or where accelerated or bonus depreciation is used because most of the income is in the first few years. Like a taxi follows a 5 year double depreciation schedule, in the first year a $25k taxi would depreciate $10k, then $6k the next year, there are many examples that are on a shorter schedule.
Keeping a 5 year straight line depreciation on R&D benefits large established businesses and burdens startups, this is primarily a political decision and not economic. Another issue is that not all R&D spending results in a valuable asset with a usable life