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I wonder how many companies will be doing more bugfixes now... For example, the initial product generates "hello world". What it was supposed to do was contro

I wonder how many companies will be doing more bugfixes now... For example, the initial product generates "hello world". What it was supposed to do was control a robot to automatically do pick and place. It's Definitely a bug that the program failed to work, it's even tracked as a defect in the issue management. No R&D involved just fixing a pretty severe software bug, namely that the product does not work.

yetanotherloser 3y ago
I like your style.
axus 3y ago
Somehow I'm reminded of delivering software licenses that don't actually activate, so that revenue could be booked now, and the software + functioning licenses delivered later.
- gumby 3y ago
  It's not GAAP revenue until the product is out of your hands and in a usable state. So you can drop the license in an envelope and recognize the revenue immediately, but only if the recipient could have used it if they'd grabbed it from the mailbox. If the license isn't usable for another month, you can send it to the customer, they can pay for it, and you can even spend the cash, but the payment sits on your balance sheet as a liability until the moment the license becomes valid.
  - natpalmer1776 3y ago
    And as with anything, sufficiently motivated legal representation will argue your way into the most favorable grey area possible. Arbitrary example being a license key that activates the software, but the activated software is effectively a hardcoded trade show demo version. The point most folks seem to be making is that “this isn’t corporate america’s first rodeo” and that like many other industries before software will end up with it’s own numerous nuances and loopholes established by extensive litigation.
gamblor956 3y ago
No, because getting from "hello world" to "controlling a robot" involves a fair amount of research and development to "fix" the "bug" since you need to work out the code needed to get to the "fix". Attempting to treat such work as not R&D would be tax evasion. But yes, in the sense that work that should not be treated as development work will no longer be treated as development (and thus no longer eligible for the R&D credit). So, actual bug fixing should not be development work going forward if the fix is simple and straightforward to carry out.
- l33t233372 3y ago
  Where is the line?
  - gamblor956 3y ago
    There isn't one yet. It's a facts and circumstances analysis.
hinkley 3y ago
Time to update your MVP books and release a 2nd Edition, ladies and germs.
mikeytag 3y ago
Unfortunately it doesn’t matter. The law is explicit that any costs related to the development of any software must be amortized. Bug fixes included. Not only that but ALL costs. Salaries, benefits, servers, subscriptions, even the percentage of utilities that go to software development have to be figured out and amortized. This is insane and bankrupting a lot of small business if left in place. “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.”

yetanotherloser 3y ago

I like your style.

axus 3y ago

Somehow I'm reminded of delivering software licenses that don't actually activate, so that revenue could be booked now, and the software + functioning licenses delivered later.

gumby 3y ago
It's not GAAP revenue until the product is out of your hands and in a usable state. So you can drop the license in an envelope and recognize the revenue immediately, but only if the recipient could have used it if they'd grabbed it from the mailbox. If the license isn't usable for another month, you can send it to the customer, they can pay for it, and you can even spend the cash, but the payment sits on your balance sheet as a liability until the moment the license becomes valid.
- natpalmer1776 3y ago
  And as with anything, sufficiently motivated legal representation will argue your way into the most favorable grey area possible. Arbitrary example being a license key that activates the software, but the activated software is effectively a hardcoded trade show demo version. The point most folks seem to be making is that “this isn’t corporate america’s first rodeo” and that like many other industries before software will end up with it’s own numerous nuances and loopholes established by extensive litigation.

gamblor956 3y ago

No, because getting from "hello world" to "controlling a robot" involves a fair amount of research and development to "fix" the "bug" since you need to work out the code needed to get to the "fix". Attempting to treat such work as not R&D would be tax evasion. But yes, in the sense that work that should not be treated as development work will no longer be treated as development (and thus no longer eligible for the R&D credit). So, actual bug fixing should not be development work going forward if the fix is simple and straightforward to carry out.

l33t233372 3y ago
Where is the line?
- gamblor956 3y ago
  There isn't one yet. It's a facts and circumstances analysis.

hinkley 3y ago

Time to update your MVP books and release a 2nd Edition, ladies and germs.

mikeytag 3y ago

Unfortunately it doesn’t matter. The law is explicit that any costs related to the development of any software must be amortized. Bug fixes included. Not only that but ALL costs. Salaries, benefits, servers, subscriptions, even the percentage of utilities that go to software development have to be figured out and amortized. This is insane and bankrupting a lot of small business if left in place. “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.”