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If the Senate passes the Section 174 changes, this situation would reverse quickly and dramatically. I don't think most engineers understand the massive massive

If the Senate passes the Section 174 changes, this situation would reverse quickly and dramatically. I don't think most engineers understand the massive massive difference between "my salary is capitalized and amortized over 5 years" vs. "my salary is fully deductible as an r&d expense". The former is essentially the status quo now, it's probably the _biggest_ contributing reason to the glut in tech layoffs, and also no CEO/CFO is going to tell their rank and file that's why they're getting laid off because of how demotivating that truth is, but that's where the ball lies. The House actually got their act together and passed it - super disappointed that the Senate is sitting on it.

frfl 3y ago
Section 174 is only _one_ part of the picture. I was very curious about this and I've been looking into this to better understand for myself what is going and why it's happening. Most likely it's a combination of things, and 174 is probably not the biggest factor: - ZIRP (0% interest rates) is gone, investors can get an easy 5% from bonds/money market, why put money into risky assets like startups - Investment money is FOMO-ing into AI rather than conventional non-AI startups - Post ZIRP investor mentality switched incredibly quickly from grow-grow-grow, to show us your revenue and profits, get fit (lean, reduce employee count, operating expenses) - Section 174 probably plays some role, but I haven't seen it mentioned at all by VC-types and financial news sources online. I've only seen it mentioned a couple of times on HN. But I'm sample size 1 and I don't go on twitter, so maybe I'm missing out on some discussions where 174 is discussed