Comment by OneDeuxTriSeiGo

> (3) Software development

> 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.

Strictly speaking every single one of those jobs falls under that role. If you "develop" any software, which arguably includes even making or maintaining excel spreadsheets (as excel is a graphical array lang inspired by APL), then you seem to fall under this umbrella.

buzer 7 days ago

Wouldn't "in connection" make this actually extremely broad? For example I doubt C-level executives have 0 connection to software development during the year. They likely make official or unofficial feature requests or give feedback. And if we really push that definition, if the software collected telemetry automatically from the user interactions and this data was then used to improve the software, wouldn't just using the software be connected with the development of the said software?

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logifail 7 days ago

> Strictly speaking every single one of those jobs falls under that role

Q: Isn't this about whether you're doing "R&D" or not?

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jandrewrogers 7 days ago

No, it classifies all software development as R&D by definition.

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- logifail 7 days ago
  
  > it classifies all software development as R&D by definition
  We may need to argue about the word "development", but in any case, do you have a reference for that?
  https://www.thomsonreuters.com/en-us/posts/tax-and-accountin...
  "In the United States, to help spawn innovation as part of the Economic Recovery and Tax Act of 1981, the Research & Experimentation Tax Credit was introduced. Although it was initially supposed to last three years as a specific incentive to encourage companies to invest in R&D, Congress recognized its value in helping businesses create more products and services.
  However, it was quickly realized that this tax code made calculations for R&D complicated, especially for small businesses, which led the government to create other iterations of tax codes in order to help clarify the situation. However, not until 2017 and the enactment of Section 174 of the TCJA has there been such a comprehensive change to R&D accounting.
  Indeed, before the TCJA’s enactment, businesses deducted the total amount of R&D expenditures as an expense in the taxable year. Beginning in 2022, all costs related to R&D must now be amortized over five years for US-based companies or 15 years for non-US companies."
  I'm struggling to understand why we think R&D expenditure - including software development - should not be amortised?
  
  Reply View | 2 replies
  
  odo1242 7 days ago
  
  People think R&D expenditure shouldn't be amoritized because it hurts startups.
  For example, if you're a first-year startup and you make a software product with $1 million in revenue but pay $900,000 in software dev salaries, and the tax rate is 25%, without amoritization you pay (1,000,000-900,000)*0.25 = $25,000 in tax and make a profit, but with 5-year amoritization you pay (1,000,000-900,000/5)*0.25 = $205,000 in tax and take a loss.
  But since established companies aren't affected as much, they are advantaged by the amoritization rule.
  
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  logifail 6 days ago
  
  > People think R&D expenditure shouldn't be amoritized because it hurts startups
  (Not trying to be deliberately obtuse but) which people "think this"? Startups and their investors, obviously, but who else?
  If world+dog has to amortize their R&D expenditure, why should startups be exempt, essentially "because software dev salaries"?
  > But since established companies aren't affected as much, they are advantaged by the amoritization rule.
  Q: Why should startups get a specific tax carve-out for "R&D"?
  
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