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No, that's literally the Section 174 change. You now must count them as R&D. The relevant paragraph from Section 174: > (3) Software development > For purpo
by demosthanos 1y ago
No, that's literally the Section 174 change. You now must count them as R&D.
The relevant paragraph from Section 174:
>
(3) Software development
> For purposes of this section, any amount paid or incurred in connection with the development of any software shall be treated as a research or experimental expenditure.
https://www.law.cornell.edu/uscode/text/26/174 https://www.law.cornell.edu/uscode/text/26/174
- mring33621 1y agowhat if you don't call it "software development"? how about "business process mechanization"?
- acedTrex 1y agoI mean sometimes fraud works, sometimes it doesnt.
- nsxwolf 1y agoThen you risk going to jail.
- brookst 1y agoAt that point you’re so into tax fraud that you light as well call them “postage and shipping”
- mring33621 1y agoOMG, I can't believe how prudish HN commenters are! Have you seen who's leading the most powerful orgs these days? Have you seen what's going on? "business process mechanization" is a fair description of what we do and probably would be just fine, tax-wise
- xhkkffbf 1y agoWhat if some executive tweaks a "no code" tool? Technically, the name says that there's no coding involved.
- zdragnar 1y agoPresumably that still counts as "developing software"- the regulation doesn't mention "coding" at all.
- xhkkffbf 1y agoA fair point. Or is it "using software"? A person typing an essay with a word processor in doing more work than many of the users tweaking no code software.
- zdragnar 1y agoA person typing an essay with a word processor is producing an essay. A person using a no-code tool to modify a software process is producing software processes. The nature of the tweak involved probably determines the classification of the effort, but for tax purposes and R&D expense amortization, it is a percentage of time basis. If the executive tweaks the code once, the percentage is so small it won't count as far as anyone cares. If 20% of the executive's time is tweaking the tool, then odds are the company cannot expense 20% of the executive's salary and instead must claim that portion as R&D over five years. Back before 174, I worked for a company that did claim R&D but only for one of the projects I worked on. As such, I had to be careful filling out my timesheet because they wanted an accurate accounting of what was salary expense and what was R&D.
- inChargeOfIT 1y agoSo that would include everything? - cloud/hosting expenses - system administrators/devops engineers and their laptops, workstations - project management software, office software, support, etc - project managers, designers, technical writers, qa engineers - software licenses, domain names, certificates, etc - internet bandwidth, data-centers, HVAC, backups
- demosthanos 1y agoWhat "in connection with" means is vague. I think a reasonably competent tax attorney could probably argue that the costs of running your production cloud serving existing customers don't count, but IANAL.