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>Precisely. They didn’t think of their work as R&D because it was not R&D. Frankly, they should have seen this coming Don't you have this backwards, or do I?
by itsoktocry 3y ago
>Precisely. They didn’t think of their work as R&D because it was not R&D. Frankly, they should have seen this coming
Don't you have this backwards, or do I?
Software development is now going to be treated as R&D, which means that costs have to be amortized. That's not an tax advantage, it's a disadvantage. All the other businesses you list get to expense their labour costs. But we agree, software dev should not be treated differently.
- john-radio 3y agoYes, my (lay) understanding is that MasterYoda has it backwards and your explanation is correct.
- welder 3y agoMasterYoda900 has it backwards. However, my CPA said software engineer salaries are only categorized as R&D before the product is launched. So this only affects new startups pre-launch... if my CPA is correct.
- indymike 3y agoThere will be lots of confusion and litigation on this exact issue.
- nickjj 3y ago> However, my CPA said software engineer salaries are only categorized as R&D before the product is launched I wonder how this one will pan out. Let's say you build out a landing page with a way for folks to input their email address which demonstrates interest in your product. You've released it and people can sign up. Did it launch? You could make case it did and now you're iterating on the product from here on out. You've launched phase 1 of the product which is probing for demand.
- brianwawok 3y agoIf you are a one man startup it doesn’t apply. This would only matter for employee salary.
- MattRix 3y agoYour CPA is incorrect. The law now applies to ALL software development and related activites, regardless of what state the product is in.
- mjwhansen 3y agoYour CPA might be referring to rules for R&D tax credits, which covers a much, much more narrow scope of business activities. R&D credits cannot offset the impact of the amortization rules.
- PaulDavisThe1st 3y agoYour CPA is not correct. Any software development costs related to improving the product by providing new features must be amortized. Only clear bug fixes can have costs that are expensable. This is made extremely clear in the IRS guidance document.
- Retric 3y agoThey have it backwards in two ways. Software isn’t Research, but Software Developers are generally doing Development ie improving existing products or developing new ones.