3 ms·
This seems a silly question but are you forced to label software development as "R&D" instead of just expensing it in the first year. I mean this is an account
by lifeisstillgood 4y ago
This seems a silly question but are you forced to label software development as "R&D" instead of just expensing it in the first year.
I mean this is an accounting trap, it seems the best way to get out of it is to use accounting.
- jsmith99 4y agoThe accounting standards forbid expensing things that should be capitalised, and if you go ahead and do it anyway your investors will wonder why your accounts show you have no assets.
- rhaway84773 4y agoYour CA would certainly prevent that from happening well before your investors look at your accounts.
- jabart 4y agoThe law has a call out that software development costs are all R&D now. So yes according to my understanding (as one of the signers) and those who have written about this as well.
- vlovich123 4y agoI think this is flawed in both directions. Sure when you’re primarily building new stuff maybe the cost of that should be amortized. What happens if you’re just maintaining a product though rather than actually developing new stuff? That doesn’t feel like R&D effort.
- pclmulqdq 4y agoMaintenance of existing software doesn't count as R&D under this categorization. The IRS will have some helpful guidance available in June. You know, two months after the deadline.
- vlovich123 4y agoGood luck figuring out how to do that accounting when teams are blended and all your workers are salaried.
- pclmulqdq 4y agoRight now, adding features to an existing SaaS is looking a lot like maintenance work to me.
- erik_seaberg 4y agoGreat, now we have to ask tax accountants how long the Microservice of Theseus was officially in maintenance mode while we rewrote it.
- reaperman 4y agoWhen you say "as one of the signers" do you mean you signed the federal bill which modified this tax? i.e. you are a congressperson? Surely I'm misunderstanding you; your post history is utterly incompatible with any sitting congressperson. But I can't figure out what you meant by it.
- mikeyouse 4y agoPer the article, some 600 business owners signed a letter to congress asking for urgent relief; > As the House legislation is introduced, a grassroots effort is gaining momentum among software developers, with nearly 600 small business owners including Landsman and Bennett signing a letter to the Hill desks of House Way and Means Committee chair Jason Smith (R-Missouri) and Senate Finance Committee chair Ron Wyden (D-Oregon) on Tuesday morning, asking for “urgent relief” and warning that failure to bring back full R&D expensing may wipe out their companies. I assume that's what he signed.
- reaperman 4y agoOh, thank you so much. RTFA...
- taxopinion 4y agoYes. You could look at this as an indictment of the tax system, in that the plain language says what it says, but the IRS expects you to hire an account to make an "appropriate determination." No small business accountant is incentivized to give you creative opinions, they're just going to go with whatever is the most popular practice. They don't give a fuck how much tax you actually pay.
- rhaway84773 4y agoIt doesn’t matter what you label an expense. Accounting principles and regulations decide what category expenses fall into. That’s a major reason CAs exist, to ensure that your expenses are correctly categorized. I am not an accountant, but I took 2 years of accounts, and learning to categorize expenses correctly was probably 75% of the classes.