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I realize this doesn't apply to Upwork, but don't the new U.S. tax laws discussed in https://news.ycombinator.com/item?id=35614313 https://news.ycombinator.com/
by pcthrowaway 4y ago
I realize this doesn't apply to Upwork, but don't the new U.S. tax laws discussed in https://news.ycombinator.com/item?id=35614313 https://news.ycombinator.com/item?id=35614313 prevent companies from writing off development costs, meaning they are taxed on the gross revenues (at least for that year)
- gamblor956 4y agoNo, they have to capitalize (or amortize) development expenses over a 5 (domestic R&D) or 15 year (foreign R&D) period instead of getting to deduct them currently (meaning in the year incurred). Due to the way depreciation works, development is treated as incurred mid-year regardless of when in the taxpayer's tax year they are actually incurred, so the ultimate effect is that only 10% of the development costs can be deducted in the first year, 20% for the next 4 years, and 10% in the final year (6th calendar year after incurring cost, due to the deemed mid-year start in the first year).