4 ms·

Since this is already hanging around for an entire tax year a lot of companies are 1/5th into that pain. If this does not get changed in the next few months it

Since this is already hanging around for an entire tax year a lot of companies are 1/5th into that pain. If this does not get changed in the next few months it would not surprise me if this becomes the new norm. Which would also be quite interesting to see how that would play out. Some companies apparently have already been amortizing salaries for a while in anticipation of this (eg: Google). Given that this also greatly punishes outsourcing I would not be surprised if at least that aspect will remain even if some of the rest will be rolled back.

tinyhouse 3y ago
Is it true that they are 1/5th into the pain? What about every new hire? That's the part I don't understand. It seems to discourage companies from increasing their headcount. Also, what happens when an employee leaves after 2 years? The company paid 2 years of salary but expensed only 35% of year 1 and 15% of year 2. Update: Now thinking about it, it doesn't matter if an employee leaves, since the company will expense their salary portions that they haven't expensed yet in their future tax bills.
- the_mitsuhiko 3y ago
  You already have such amortizations for a lot of things. In some cases this even gives you possibilities to improve your tax burden. It just means that you cannot deduct it all in one year. If you downsize a company to zero employees you still get to subtract salaries for a few more years against your profits. It will set different incentives wiring wise and I’m not convinced they are good ones, but from this rule some people will benefit so they might fight the rollback.
  - wait_a_minute 3y ago
    Would this cause more intentional hiring? In other words, since everyone's already 1/5th into it this means that anyone who was hired in the last year since all those layoffs was hired intentionally with more of an expectation of betting on them for the longer term.
jdjskiaka 3y ago
> Some companies apparently have already been amortizing salaries for a while in anticipation of this (eg: Google) > Given that this also greatly punishes outsourcing Anyone help me understand these more? My understanding was that instead of deducting the costs of paying software devs the year it happened, it will be spread over 5 years. Which leads to a bigger tax bill now, and benefits bigger companies with deeper pockets as opposed to smaller businesses which have to raise moneny to pay taxes (or lower costs, potentially lower hiring). This should also push companies towards outsourcing, since not all places have similar laws? Is my understanding wrong?
- moron4hire 3y ago
  It won't push people to outsourcing, because the same code change requires 15 year amortization for foreign R&D expenditures.
  - jdjskiaka 3y ago
    Perhaps not as straight forward, outsourcing is generally lot cheaper.
    - MattRix 3y ago
      This applies to all foreign R&D, not just where it is much cheaper… and unless it is many times less expensive, it will not be worth it. Only being able to deduct 1/15th per year is absurd.
    - hobofan 3y ago
      If you believe the Accenture pitches from 2010, sure.
- the_mitsuhiko 3y ago
  For foreign contractors the time frame is 15 years instead of 5.
  - wait_a_minute 3y ago
Klonoar 3y ago
My understanding is that Google just always did that, it wasn’t in anticipation of the changes here.

tinyhouse 3y ago

Is it true that they are 1/5th into the pain? What about every new hire? That's the part I don't understand. It seems to discourage companies from increasing their headcount. Also, what happens when an employee leaves after 2 years? The company paid 2 years of salary but expensed only 35% of year 1 and 15% of year 2. Update: Now thinking about it, it doesn't matter if an employee leaves, since the company will expense their salary portions that they haven't expensed yet in their future tax bills.

the_mitsuhiko 3y ago
You already have such amortizations for a lot of things. In some cases this even gives you possibilities to improve your tax burden. It just means that you cannot deduct it all in one year. If you downsize a company to zero employees you still get to subtract salaries for a few more years against your profits. It will set different incentives wiring wise and I’m not convinced they are good ones, but from this rule some people will benefit so they might fight the rollback.
- wait_a_minute 3y ago
  Would this cause more intentional hiring? In other words, since everyone's already 1/5th into it this means that anyone who was hired in the last year since all those layoffs was hired intentionally with more of an expectation of betting on them for the longer term.

jdjskiaka 3y ago

> Some companies apparently have already been amortizing salaries for a while in anticipation of this (eg: Google) > Given that this also greatly punishes outsourcing Anyone help me understand these more? My understanding was that instead of deducting the costs of paying software devs the year it happened, it will be spread over 5 years. Which leads to a bigger tax bill now, and benefits bigger companies with deeper pockets as opposed to smaller businesses which have to raise moneny to pay taxes (or lower costs, potentially lower hiring). This should also push companies towards outsourcing, since not all places have similar laws? Is my understanding wrong?

moron4hire 3y ago
It won't push people to outsourcing, because the same code change requires 15 year amortization for foreign R&D expenditures.
- jdjskiaka 3y ago
  Perhaps not as straight forward, outsourcing is generally lot cheaper.
  - MattRix 3y ago
    This applies to all foreign R&D, not just where it is much cheaper… and unless it is many times less expensive, it will not be worth it. Only being able to deduct 1/15th per year is absurd.
  - hobofan 3y ago
    If you believe the Accenture pitches from 2010, sure.
the_mitsuhiko 3y ago
For foreign contractors the time frame is 15 years instead of 5.
- wait_a_minute 3y ago

Klonoar 3y ago

My understanding is that Google just always did that, it wasn’t in anticipation of the changes here.