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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

#271

Post by pm90 »

rendaw wrote: post #179

There's something I didn't get about the discourse about this, maybe someone can explain. The tax change greatly affected small businesses/startups with unstable revenue, right? But companies like Amazon, Google, etc are much more established companies with diversivied, stable revenue and longer term planning I'd assume - so it doesn't seem like this should have affected them as much. The popular story currently is t…

Its a combination of factors. The end of ZIRP made raising money more expensive and the tax change made hiring Software Engineers more expensive. Small businesses faced existential challenges and cut back, so now there was less demand from them. Then Big Tech realized they needed to layoff to post better numbers to continue boosting their stock (even though they made enough revenue) so started cutting jobs.

With this change one of those factors has been eliminated, so we will see startups/small businesses become a lot more competitive.

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

#272

Post by jandrewrogers »

MangoToupe wrote: post #247
tossandthrow wrote: post #233

Earlier quoted context omitted.

The current administration is making a huge fuss out of VAT in Europe.

Sadly, not to adopt such a sane taxation method....

That isn't really possible because American Constitution expressly prohibits it. There is no realistic possibility of modifying the Constitution to allow it either.

As far as the US Federal government is concerned it has little practical relevance.

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

#273

Post by mindslight »

AnthonyMouse wrote: post #192
mindslight wrote: post #45

Earlier quoted context omitted.

Twisting not required. Depreciation straightforwardly applies to every other business capital expenditure. Hire someone to put a new roof on a rental property, and you're out the tens of thousands of dollars cash while only getting an immediate deduction for one thirtieth of the value. If you were expecting to pay that cash out of income, it's effectively a realized income and then reinvestment. The recent (-ly undon…

> The recent (-ly undone) change went against decades of how things were, was crippling for medium size cashflow-positive startups, effectively increased taxes, etc. But it was really just a straightforward application of the general principles that apply to most everything else. The error was in reconciling them by getting rid of it for software R&D instead of allowing other business expenses to be deducted when the…

Sure, a lot of that understanding was included in my recognition of the downsides.

The fundamental dynamic is that the government wants there to be a forcing function on having to actually realize profits, so that taxes have to be paid in a timely fashion. They don't want people to be able to reinvest all of the effective profit and keep kicking the can into the future indefinitely. Capital gains and retirement plans are exceptions, each for their own reasons.

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

#274

Post by __turbobrew__ »

tareqak wrote: post #2

> Foreign R&D must still be amortized over 15 years

How does that actually work? Most large companies open foreign subsidiaries owned by the parent, for example “Microsoft” will own “Microsoft Canada” and employees working in Canada work for “Microsoft Canada” and NOT the main “Microsoft” company.

The R&D done by Canadians is booked against Microsoft Canada, so in my mind the Canadian laws around R&D would apply and not the USA laws of 15 years old amortization?

Am I missing something?

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

#275

Post by mindslight »

eastbound wrote: post #148
mindslight wrote: post #60

Earlier quoted context omitted.

Yes, salaries spent to build a capital asset. Half the cost of a new roof is paying salaries, right? And yet, you still depreciate the whole value of the completed thing, not just the cost of the input materials. If you hire the roofers yourself as employees, you're still supposed to be accounting this way - although obviously there are many ways to fudge it. The point is that building a piece of software that is goi…

The debate is the duration of the capex in software. The law will oscillate between “Software lasts 15 years!” and “basically throw-away”. At this moment, the law came back to 1-year deprecation.

"1-year deprecation [sic]" would mean that salaries paid in the second half of the (fiscal) year are only half deductible in that year, and half in the next.

But seriously what is with this trend of throwing out simple reframings as if they're insightful on their own?

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

#276

Post by acedTrex »

xlii wrote: post #256
PeterStuer wrote: post #186

Earlier quoted context omitted.

From experience I think your 10% feels overly pessimistic. 30-40% feels more accurate, just like only about the same % that can survive an open plan or cubicle floor. I see lots of people thriving in remote. Main reasons being a huge increase in quality of life. Regaining 2-3 hours of senseless commuting time per day, getting small household chores done over lunch, not having to schedule repair and maintainance appoi…

I can’t disclose details but I’ve been doing mentoring, screening and interviewing + screening for years and saw remote communities grow from 10s to 1000s. What you’re saying is true especially in the honeymoon phase, but the running joke is that you don’t really live remote life unless solitude made you name a pigeon. I’ve seen careers of many of my peers and usually 5 years in people starts to seek on-site. There’s…

I think it is really the commute that makes or breaks the office. My commute is 40 mins there and if I leave after 4pm itll take me an hour 15 to an hour 30 to get home. All in bumper to bumper standstill traffic

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

#277

Post by HerrMonnezza »

xlii wrote: post #256
PeterStuer wrote: post #186

Earlier quoted context omitted.

From experience I think your 10% feels overly pessimistic. 30-40% feels more accurate, just like only about the same % that can survive an open plan or cubicle floor. I see lots of people thriving in remote. Main reasons being a huge increase in quality of life. Regaining 2-3 hours of senseless commuting time per day, getting small household chores done over lunch, not having to schedule repair and maintainance appoi…

I can’t disclose details but I’ve been doing mentoring, screening and interviewing + screening for years and saw remote communities grow from 10s to 1000s. What you’re saying is true especially in the honeymoon phase, but the running joke is that you don’t really live remote life unless solitude made you name a pigeon. I’ve seen careers of many of my peers and usually 5 years in people starts to seek on-site. There’s…

Interesting remarks, thanks!

When discussing remote vs non-remote with a colleague some time ago over lunch, he mentioned that "remote is an extreme version of yourself", so those inclined to slack off will slack off way more to the point of being unproductive, and those inclined to work longer hours will eventually just spend all their time working... Maybe over-simplified but I think he was onto something.

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

#278

Post by __turbobrew__ »

anovikov wrote: post #121
ttul wrote: post #84

Meanwhile, in Canada, not only can you expense R&D, but there is a cashable tax refund that will give you back about 60% of your developers’ salaries…

So it means that indirectly, developers' salaries are not a taxable income in Canada if they are working on R&D? Meaning, they do pay taxes on their income, but their employer gets those taxes back, so if tax is 60%, the employer could pay 250% of what they'd pay otherwise, get 150% back, then the developer pays 150% of taxes, and gets 100%, so in effect the salary is tax-free. Is that what you meant to say? If so, i…

There is lots of paperwork for SR&ED, enough so that companies opt not to do it.

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

#279

Post by FireBeyond »

9283409232 wrote: post #35
cheriot wrote: post #29

Earlier quoted context omitted.

In the last 10 years, have there been more than a handful of bills that got 60 votes in the senate? I wouldn't like what the current congress would do without the filibuster, but at this point a paralyzed system might be worse.

The answer is to vote out politicians. Getting ranked choice voting on your states ballot would go a long way to fixing this. They would not have Mamdani on the ballot for NY mayor if it wasn't for ranked choice voting. Certain politicans know this and have made RCV illegal in their state. Get RCV on the ballot for your state.

> Certain politicans know this and have made RCV illegal in their state.

That would be Republicans.

While Democrats have pushed across multiple states for changing voting mechanisms, Republicans in eleven states have pre-emptively banned any and all use of RCV at any level within the state.

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

#280

Post by FireBeyond »

rhinoceraptor wrote: post #25
earth2mars wrote: post #20

Earlier quoted context omitted.

This. TCJA removed it and OBBBA restored it. What am I missing here

Classic 45-47 maneuver, first create a problem. Then solve it, often poorly and incompletely. Finally, claim victory, another 300 IQ 5D chess move in the books.

Or set a little timing booby trap. Like in this, "We're going to cut Medicaid, but only after the midterms, so if you start screaming about it, we'll blame the Dems for it."
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