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OBBB signed: Reinstates immediate expensing for U.S.-based R&D

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Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#161

Post by Cipater »

umeshunni wrote: post #22

The 2nd most annoying thing about section 174 was all the time you had to spend classifying each engineer's time spent as R&D or 'internal software'. At my last company, every year, me and my engineering lead counterparts would spent almost a day reviewing each engineer's JIRA tickets to reconstruct how much of their time was spent on R&D vs internal software.

>was all the time you had to spend classifying each engineer's time spent as R&D or 'internal software'

> every year, me and my engineering lead counterparts would spend almost a day

This is quite funny. Not even a day, almost one.

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#162

Post by saubeidl »

archagon wrote: post #153

Oh, goody! Also, ICE has a bigger budget now than most of the world's militaries[1]. But let's not talk about that. [1]: https://www.newsweek.com/immigration-ice-bill-trump-2093456

An organization of goons who grab people off the street and disappear them to concentration camps? Why does that sound so familiar?

Capitalists have always been involved in the rise of fascist movements.

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#163

Post by xlii »

BobbyJo wrote: post #141
me551ah wrote: post #134

I doubt if this will make much difference. Offshoring as a tactic emerged in the pandemic when companies realised that being “remote” works just as well. Sure, foreign R&D still gets amortized over 15 years (NPV ≈59 % of a full write-off, so you “lose” ~8.6 % of your R&D spend in present-value terms, and only 6.7 % of the cost is deductible in year 1, creating a 19.6 % cash-tax gap). But offshore wages are often 50–7…

This ignores the other financial and non-financial costs of offshoring: legal, cultural, temporal... a lot of the time, those close the gap. On paper, offshoring has made sense the entire time, and yet here we are in 2025 and companies still hire American devs. Not only that, they often fly in foreign devs just to pay them more here than if they had just offshored to their home country.

I have approx. 15 years of experience working remotely for various companies all across the globe and was always an advocate of thesis that remote work is difficult and most people aren’t cut for it and (to horror of many proponents) and on average are less efficient than on-site hires.

There are many reasons: It’s difficult to understand _intention_ when deprived of non-verbal communication and working in a choppy network call. Even if one can gloss over communication needs etc. there’s burnout looming around the corner and natural, healthy laziness getting into the way. Sometimes even internal politics might be blocking knowledge/access/contribution for more or less peculiar reasons.

It’s not like it’s impossible to hire remote engineer, yet my (completely unmetered) estimates out of experience is that approx. 10% of engineers willing to work remotely can sustain health (physical and mental) and be efficient outside of 1-2 years of honeymoon period.

There was some tumbling around COVID but IMO both stationary jobs and remote ones are doing well on mid-high quality positions.

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#164

Post by coffeebeqn »

akmarinov wrote: post #130
seattle_spring wrote: post #83

Earlier quoted context omitted.

Anyone who knows anything about software and has used AI for more than 24 hours knows that AI won't be "replacing" software engineering anytime soon.

Hard disagree, I’ve been agentic coding the past couple of months and have written maybe 100 lines doing this for a living. The rest is coming up with SDDs and reviewing AI’s code. I can easily see most devs, doctors and lawyers automated away in the next couple of years.

Either we have wildly different difficulty levels at our jobs or this is bs. I tried the agents (I get access to basically all state of the art from my company) and they still have all the same issues of agents from a year back. Each step gets more chaotic and the end result is always that I end up reverting the over complicated mess it made and writing it myself. One-offs with lots of context still sometimes work.

Even a perfect eval loop like failing tests end up 80% of the time with them creating something way too complicated since they solve one visible but not root issue at a time and build on top of that hacky foundation until again I end up reverting it all

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#165

Post by BobbyJo »

__loam wrote: post #145
BobbyJo wrote: post #141

Earlier quoted context omitted.

This ignores the other financial and non-financial costs of offshoring: legal, cultural, temporal... a lot of the time, those close the gap. On paper, offshoring has made sense the entire time, and yet here we are in 2025 and companies still hire American devs. Not only that, they often fly in foreign devs just to pay them more here than if they had just offshored to their home country.

Yeah people have been offshoring then onshoring once they realize offshoring sucks since at least the 90s. I remember my dad, who was also a software dev, complaining about it 20 years ago. It always swings back. The network effect in huge hubs like SF and NYC is massive.

100%. Most of the planet is cheaper than the US, and has been for decades. That being the case, how are there so many knowledge workers here still?

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#166

Post by Thorrez »

n_u wrote: post #8

It also classifies software development as R&D which together with immediate expensing for R&D undoes the Section 174 changes as far as I understand. “For purposes of this section, any amount paid or incurred in connection with the development of any software shall be treated as a research or experimental expenditure“ Page 303 of bill here https://www.congress.gov/119/bills/hr1/BILLS-119hr1eas.pdf Original article ab…

>It also classifies software development as R&D

The TCJA (passed in 2017) already did that (effective 2022). So it sounds like this new bill is keeping that, but changing the deduction rules back to what they were before 2022.

See this previous discussion of the TCJA:

> all "software development" is now an R&E expense.

https://news.ycombinator.com/item?id=34627712

(AIUI, "R&D" (research and development) and "R&E" (research and experimentation) are synonyms.)

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#167

Post by Thorrez »

tareqak wrote: post #136
n_u wrote: post #8

It also classifies software development as R&D which together with immediate expensing for R&D undoes the Section 174 changes as far as I understand. “For purposes of this section, any amount paid or incurred in connection with the development of any software shall be treated as a research or experimental expenditure“ Page 303 of bill here https://www.congress.gov/119/bills/hr1/BILLS-119hr1eas.pdf Original article ab…

Page 301 > there shall allowed as a deduction any domestic research and experimental expenditures which are paid or incurred by the taxpayer in the current taxable year AFAIK, there was no domestic vs. foreign R&D distinction in section 174 before.

There was a domestic vs foreign distinction in the TCJA, passed in 2017, which took effect in 2022:

> 174 to require taxpayers to amortize specified R&E expenditures ratably over a five-year period for domestic expenditures and a 15-year period for specified R&E expenditures attributed to foreign research

https://www.journalofaccountancy.com/issues/2022/nov/amortiz...

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#168

Post by tossandthrow »

eric-burel wrote: post #149
me551ah wrote: post #134

I doubt if this will make much difference. Offshoring as a tactic emerged in the pandemic when companies realised that being “remote” works just as well. Sure, foreign R&D still gets amortized over 15 years (NPV ≈59 % of a full write-off, so you “lose” ~8.6 % of your R&D spend in present-value terms, and only 6.7 % of the cost is deductible in year 1, creating a 19.6 % cash-tax gap). But offshore wages are often 50–7…

If I read properly this is explicitely targeting UE, Canada, UK and other countries with high wages and R&D and software engineering capabilities.

Yep, seems like this is an opaque tarrif.

Other countries should use this when retaliating.

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#169

Post by monster_truck »

umeshunni wrote: post #22

The 2nd most annoying thing about section 174 was all the time you had to spend classifying each engineer's time spent as R&D or 'internal software'. At my last company, every year, me and my engineering lead counterparts would spent almost a day reviewing each engineer's JIRA tickets to reconstruct how much of their time was spent on R&D vs internal software.

Why would you waste time doing this when you could just make shit up?

And just to clarify, that has been the MO any time I've been told to do this. If it's actually important they wouldn't want your numbers

Re: OBBB signed: Reinstates immediate expensing for U.S.-based R&D

#170

Post by Thorrez »

agwa wrote: post #42

As a small software business owner, I have to agree with Michele Hansen (who spent 2 years advocating on behalf of small software businesses for this very change): "we’re finally going to get Section 174 relief, and I couldn’t be angrier" https://www.linkedin.com/posts/mjwhansen_it-looks-like-were-...

Is the girl in the picture going to lose coverage? If yes, what part of the OBBB is going to remove her coverage? If not, then why go into all this detail about her if she's going to keep her coverage?
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