2 ms·

Could someone elaborate this for an uninformed like me? Does it mean if you (a company) pay $1M as salary this year, only $0.2M can be treated as cost?

• zacharycohn 2y ago
  Essentially. An extremely oversimplified scenario: On paper if you made $1M in revenue, and had $1M in salary expenses that were all R&D, you would deduct $200k of that salary and be left with $800,000 in "profit" that you have to pay taxes on. Except you don't have $800k. You have $0k.
  • giancarlostoro 2y ago
    Yikes. I kept wondering why R&D has been dead for so long. I have made comments here on HN about how R&D is responsible for so many tech advancements we still use, especially at Bell Labs.
    • zacharycohn 2y ago
      This is a recent change, thanks to the 2018 tax code changes (the implementation was delayed until this tax year).
  • jimbobthrowawy 2y ago
    Why would that be counted as profit at all, if it was spent?