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That is strictly not true. You would absolutely capitalize the salaries of those building capital assets.
by jncfhnb 3y ago
That is strictly not true. You would absolutely capitalize the salaries of those building capital assets.
- galaxyLogic 3y agoIt maybe be easier to understand this viewpoint if we consider that instead of paying a salary to developers, the company could pay an independent contractor to develop a software application. Clearly payments to the outside contractor would not be expenses needed to run the company, but rather a purchase of an asset. But using inhouse employees instead wouldn't really materially change what the money is spent on. I guess the situation is the same when a company uses its employees to build a house, instead of buying one. So that is the reasoning behind the law I guess but I still don't think it is a good idea. Research and Development is something the government would be wise to promote and support.
- 15457345234 3y ago> I still don't think it is a good idea It's not a good idea because it's not how things are done in literally any other country that develops software. This makes all US development shops immediately 1/5th as profitable (on the books) as non-US shops. Yes, they catch up after 5 years, if they're still in business. I'm not sure that I'm overstating it but this law change will, I think, effectively eliminate onshore software development as a profitable activity. It's very strange that this hasn't been checked back given the size of the sector. I don't normally believe stories about US government dysfunction - which seems mostly like a dog and pony show - but for something like this not to have been rectified is a bit odd.
- jncfhnb 3y agoUS dev shops are immensely more profitable than anything else. It’s not about where the devs are, it’s whether you’re a U.S. company. So that’s all moot.