kgwgk

20 ms·

451.
by kgwgk 1y ago
That’s how it used to be until a special rule was introduced allowing only $15m (or maybe $20m) to be expensed instead of capitalized. Doesn’t change much for the Avengers films which have production costs around $500m. Disney still has to
452.
by kgwgk 1y ago
> In other words, the IRS receives more upfront but less total in the end. How so?
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by kgwgk 1y ago
Yes, it tends to. However: 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 expendit
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by kgwgk 1y ago
The short answer to some of those questions is yes. But clearly not for the final question: “does that create incentives to try to keep employees longer-term in order to make them more cost-efficient?”
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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.
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by kgwgk 1y ago
Exactly. That’s why when a company builds a factory it’s considered a capital investment. Because it’s built by slaves. It’s not like the workers are being paid for their labor or anything.
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by kgwgk 1y ago
> Nevertheless it's often debatable what's maintenance and what's a new feature. The same is true for many capital assets. There are people who have time to look into these things because that’s their job.
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by kgwgk 1y ago
> And yet all of them seem to be subject to section 174, builders, maintainers, testers. Do they? Upthread one can read: > Activities that are not treated as software development vis-à-vis software developed by a taxpayer for use in i
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by kgwgk 1y ago
Nothing. The calculation has nothing to do with people. It’s about what the company spends - and some kind of spending is capitalized depending on what activity it was related to and what the output was. That doesn’t change if the employee
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by kgwgk 1y ago
> Why is salary for someone building a house deductible, but salary for someone building a for loop a capital expense. If the “house” (or the for loop) is sold and gone, it’s not an asset and the cost of the goods sold — salaries include
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by kgwgk 1y ago
You asked for a source for https://news.ycombinator.com/item?id=44233155 I thought it was for the first paragraph. But I was wrong about 174, maybe you meant that.
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by kgwgk 1y ago
> If it's an actual machine, payroll for building it is fully deductible, like most other payroll. Not if the machine is used as an integral part of manufacturing, production, or extraction, or an integral part of furnishing transpo
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by kgwgk 1y ago
https://www.law.cornell.edu/cfr/text/26/1.263(a)-2 Example 4. Acquisition or production cost. D purchases and produces jigs, dies, molds, and patterns for use in the manufacture of D's products. Assume t
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by kgwgk 1y ago
> One could argue in the future, for example, that those who operate machines to produce tooling dies, should not have their labor treated as regular expenses, but instead as capital assets because their labor output is captured in asset
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by kgwgk 1y ago
Watching TV isn’t cheap if you consider the impact on the climate and the cost that comes from it.
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by kgwgk 1y ago
> You seem to be nitpicking on semantics for no real reason. I guess I didn't interpret your statement about "several decades of almost zero low-interest rates" between 1990 and 2020 loosely enough. > You also seem to h
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by kgwgk 1y ago
> The annualized returns of bond ETFs cannot be relied upon because The annualized returns are calculated from the prices you pay when you buy and the price you get when you sell. Whatever you think they do seems irrelevant. The fact is
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by kgwgk 1y ago
> My impression was that it's pretty easy to do straightforward things like the examples described in the article. But when you have to do complicated or unusual things with your data I found it very frustrating to work with. That&#
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by kgwgk 1y ago
> The chart you linked isn't inflation indexed. Neither was your comment. The alternative reading "You lose money from the inflation when the rate of interest is below the inflation rate which it almost surely was given the sev
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by kgwgk 1y ago
> several decades of almost zero low-interest rates in that time period What are those “several decades” more precisely? https://fred.stlouisfed.org/graph/?g=1JtLn
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by kgwgk 1y ago
> You're talking about making a 30-year duration bet that inflation will not increase. If you call that risk-free I didn’t say anything about “risk-free” (the closest is the second paragraph but you don’t address it at all). I was c
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by kgwgk 1y ago
People is getting fooled by "adjusted" earnings that reduce salaries "on paper" by hiding the "non cash" component.
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by kgwgk 1y ago
> Held for 30 years, bonds are eaten alive by inflation. 20-year and 30-year bonds yield 5% today. That's well above inflation expectations. You can actually buy inflation-linked bonds that are going to pay you 2.5% over inflation f
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by kgwgk 1y ago
> Europe has also experienced a great deal of growth with many European countries even growing moreso than the U.S., for example Germany. I can't make sense of that example. Are you maybe comparing the level of the S&P 500 with
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by kgwgk 1y ago
Fair point. I changed the question to "according to the tax code" and it told me that Construction labor is generally not deductible as an expense in the year incurred if it is related to the construction or improvement of a capit
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by kgwgk 1y ago
> Developing countries, particularly those in Asia, have seen incredible returns over a 30 year period, albeit with a great deal of volatility involved. The level of the MSCI China index 30 years ago was HKD 70 and it's HKD 75 today
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by kgwgk 1y ago
> there is practically no way the US bonds would not pay out or lose value. Bonds can "lose value" and they did so quite strongly in 2022/23. If you bought 20-year bonds in 2020 for $100 they are worth $60 now (and were as
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by kgwgk 1y ago
> Index funds [...] fees were high According to https://corporate.vanguard.com/content/corporatesite/us/en/c... they were 0.35% in 1990. Higher than now, but hardly "high". Of course there a
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by kgwgk 1y ago
Also, if you had been born in 2000 you may have preferred the bonds. It took 20 years for equities to outperform.
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by kgwgk 1y ago
> Dear ChatGPT, is construction labor deductible as an expense in the year it is incurred according to GAAP? Please answer in a few lines. Under GAAP, construction labor is not immediately deductible as an expense in the year it is incur

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