Thousands of small businesses are struggling because of R&D amortization
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Re: Thousands of small businesses are struggling because of R&D amortization
#2[deleted]
Re: Thousands of small businesses are struggling because of R&D amortization
#3Not much detail available
Re: Thousands of small businesses are struggling because of R&D amortization
#4>A handful of these small business owners have bravely spoken to journalists from the Wall Street Journal and CNBC[...]But the vast majority are hesitant to speak to journalists as it might give their competitors free intel or make their employees nervous that they might lose their jobs.
This seems a tad overblown? "brave", "free intel"? Why would we need to hear the same thing from thousands of small businesses? This stuff is all over the industry, but employees are oblivious unless their company is explicitly interviewed?
It's a bad law, but I'm not sure what is interesting about this Tweet.
Re: Thousands of small businesses are struggling because of R&D amortization
#5I don’t see why software should receive special treatment when 99.99% of software engineers/developers are not in any way engaged in what might be considered genuine scientific research and development, which R&D tax advantages should be reserved for.
> Changes to R&D amortization were a rude surprise to them, as they'd never had to amortize software development before, and didn't think of the work they do as R&D.
Precisely. They didn’t think of their work as R&D because it was not R&D. Frankly, they should have seen this coming.
> These are small businesses we're talking about. Almost all of them make under $10M in annual revenue, and the vast majority are under $2M in revenue.
What about the millions of other small businesses that don’t get special tax treatment? Restaurants, bars, plumbing companies, landscaping companies, accounting firms, etc.? Software engineers are not scientists. At the end of the day, a company is supposed to be able to stand on its own two feet, not rely on government handouts. Allowing otherwise unprofitable businesses to stay in business disincentivizes innovation and efficiency, which harms productivity growth and makes us all poorer in the long run.
Re: Thousands of small businesses are struggling because of R&D amortization
#6? Was there a change in the tax code?
Then why not provide some links, it isn't secret then?
Why wouldn't people be able to talk about it.
What is brave about discussing a tax policy? There was not context given about what it is, what is is causing.
Re: Thousands of small businesses are struggling because of R&D amortization
#7More detail with math here. Lawmakers are discussing delaying these changes for a few years and/or allowing deductions for domestic employees, but all depends on signing a budget, which is never certain.
Re: Thousands of small businesses are struggling because of R&D amortization
#8I don’t see why software should receive special treatment when 99.99% of software engineers/developers are not in any way engaged in what might be considered genuine scientific research and development, which R&D tax advantages should be reserved for. > Changes to R&D amortization were a rude surprise to them, as they'd never had to amortize software development before, and didn't think of the work they do as R&D. Pr…
I don’t think you understand what they’re discussing.
If you run a plumbing company, make $100K in revenue, pay a plumber $100K, you have no profits, owe no corporate taxes.
If you run a software company, make $100K in revenue, pay a software engineer $100K, section 174, which just went into effect recently, means you now owe taxes on $90K of profit. This is because you must spread dev costs over 5 years, you can’t deduct them in the year they happened.
Re: Thousands of small businesses are struggling because of R&D amortization
#9I don’t see why software should receive special treatment when 99.99% of software engineers/developers are not in any way engaged in what might be considered genuine scientific research and development, which R&D tax advantages should be reserved for. > Changes to R&D amortization were a rude surprise to them, as they'd never had to amortize software development before, and didn't think of the work they do as R&D. Pr…
>Precisely. They didn’t think of their work as R&D because it was not R&D. Frankly, they should have seen this coming
Don't you have this backwards, or do I?
Software development is now going to be treated as R&D, which means that costs have to be amortized. That's not an tax advantage, it's a disadvantage. All the other businesses you list get to expense their labour costs. But we agree, software dev should not be treated differently.
Re: Thousands of small businesses are struggling because of R&D amortization
#10FWIW, Gergely Orosz provided some helpful background on Twitter and in his newsletter: