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This is about taxes. I imagine you’re aware that GAAP accounting and tax accounting can treat things like depreciation schedules differently.
by kgwgk 1y ago
This is about taxes. I imagine you’re aware that GAAP accounting and tax accounting can treat things like depreciation schedules differently.
- andrewlgood 1y agoThe definition of capitalizable expenses tends to be the same between GAAP and tax. The depreciation schedules are frequently different.
- kgwgk 1y agoYes, it tends to. However: https://www.law.cornell.edu/uscode/text/26/174 https://www.law.cornell.edu/uscode/text/26/174 any amount paid or incurred in connection with the development of any software shall be treated as a research or experimental expenditure [and be capitalized and amortized over five years even if it is disposed of, retired, or abandoned]
- steine65 1y agoI stand corrected. I've not seen GAAP vs IRS differ so much in my experience. Thanks for referencing IRS section 174 which clears things up. It appears to be quite strict on the 5/15 year amortization of software development expenses, and I now agree with OP that the change to section 174 as part of the TCJA is some bullshit.