4 ms·

every startup I worked at used the research thing for things that definitely were not studying how to improve the computing field.

voxic11 2y ago
That isn't how the IRS defines it though. Essentially anytime software is being "developed" they will let you classify it as "R&D" (well you can claim the 174 R&D expense deduction but not the R&D Tax Credit under Section 41 which requires activities closer to what you describe). > Section 5 of Rev. Proc. 2000-50 provides, “The costs of developing computer software (whether or not the particular software is patented or copyrighted) in many respects so closely resemble the kind of research and experimental expenditures that fall within the purview of section 174 as to warrant similar accounting treatment.” As a result, “the Service will not disturb a taxpayer’s treatment of costs paid or incurred in developing software for any particular project, either for the taxpayer’s own use or to be held by the taxpayer for sale or lease to others,” where the taxpayer either treated the costs as currently deductible expenses under former Sec. 174(a) or capitalized and amortized them under former Sec. 174(b) (id.).
- therealpygon 2y ago
  Almost makes you wonder what that D stands for in “R&D”.
  - TeMPOraL 2y ago
    It stands for "marketing", obviously. After all, that's what you do to "develop" the output of your "research" into a product.
- grandempire 2y ago
  I know. Im not saying they were committing fraud. Im saying this is of questionable social value to subsidize.
nivertech 2y ago
It’s not about “improving the computing field”, but creating new IP (Intellectual Property). Old industries - get paid for doing the actual work Enterprise SW - get paid for automating things Software companies - get paid for writing COTS (Commodity of the Shelves) software Sharing economy startups - get paid percentage of every transaction in a specific marketplace

voxic11 2y ago

That isn't how the IRS defines it though. Essentially anytime software is being "developed" they will let you classify it as "R&D" (well you can claim the 174 R&D expense deduction but not the R&D Tax Credit under Section 41 which requires activities closer to what you describe). > Section 5 of Rev. Proc. 2000-50 provides, “The costs of developing computer software (whether or not the particular software is patented or copyrighted) in many respects so closely resemble the kind of research and experimental expenditures that fall within the purview of section 174 as to warrant similar accounting treatment.” As a result, “the Service will not disturb a taxpayer’s treatment of costs paid or incurred in developing software for any particular project, either for the taxpayer’s own use or to be held by the taxpayer for sale or lease to others,” where the taxpayer either treated the costs as currently deductible expenses under former Sec. 174(a) or capitalized and amortized them under former Sec. 174(b) (id.).

therealpygon 2y ago
Almost makes you wonder what that D stands for in “R&D”.
- TeMPOraL 2y ago
  It stands for "marketing", obviously. After all, that's what you do to "develop" the output of your "research" into a product.
grandempire 2y ago
I know. Im not saying they were committing fraud. Im saying this is of questionable social value to subsidize.

nivertech 2y ago

It’s not about “improving the computing field”, but creating new IP (Intellectual Property). Old industries - get paid for doing the actual work Enterprise SW - get paid for automating things Software companies - get paid for writing COTS (Commodity of the Shelves) software Sharing economy startups - get paid percentage of every transaction in a specific marketplace