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I think an implicit assumption here is that the company is able to survive the five years. This rule affects cash flow in the initial years pretty hard and a lo
by arunabha 1y ago
I think an implicit assumption here is that the company is able to survive the five years. This rule affects cash flow in the initial years pretty hard and a lot of small companies cannot survive that.
- blindriver 1y agoIn the initial years most startups have massive losses that they carry forward and don’t need to pay taxes anyway. During that bridge period the affect of section 174 is zero since they aren’t paying taxes anyway. This really only affects software companies that are profitable in their first year, which is a very small minority.
- Schiendelman 1y agoI think you're missing something - the only way these startups have those massive losses is if they can deduct them. This rule change stops them feom being able to deduct 80% of most of their expenses in the year where the expense occurs.
- mgkimsal 1y agoAmen.