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Bloomstink has a short article on R&D expenses/tax credits as does Reuters on some of the back and current history.

But just as an accounting note: R&D expense has nothing to do with the company having revenues for an existing product, which already is allowed to deduct cost of goods sold, selling and admin expense. It is a cost related to future business and in that regard, it is not crazy to say it should be amortized. That in the past this did not happen, or that accelerated depreciation for other assets is in the IRS code is a function of the government wanting to effectively subsidize business investment.

https://pro.bloombergtax.com/insights/federal-tax/rd-tax-cre...

https://tax.thomsonreuters.com/news/the-future-of-rd-expensi...




But most employee salaries are deductible right? If you hire a chef at your restaurant, you aren't depreciating their salary.

Doesn't that make software engineers one of the few employees with much worse tax treatment?


I think that is the simplest and best analogy I have read so far in the comments.


The chef doesn't create a meal once that you can sell for the next 10 years though. You pay him for time X, he makes a meal, you sell that meal.

That's fundamentally different from regular software development outside of agencies where there is no direct relationship. Software development is closer to an investment than an expense.

Amortization sucks in general, yes, because the money is gone and it doesn't affect your taxes to the same amount, but that's not different for any company doing manufacturing or anyone needing specialized tools or vehicles that cost significant amounts.


When someone pays for labor to build an apartment building they profit off for decades, do they amortize that labor?


I think there is an argument that both could be valid. I wonder why we cant let the company decide to pick one over another and not be so fixated on one tax code to rule them all.


A comment I read in the thread here says the answer is "Yes". To which I have to say, that sucks.


That is production, not R&D. Basic research into, for instance, semiconductors may one day lead to the production of a new product. The R&D costs would be amortized, the eventual production costs would not.


> The chef doesn't create a meal once that you can sell for the next 10 years though. You pay him for time X, he makes a meal, you sell that meal.

What if the chef invents a new signature dish that makes your restaurant famous for the next 10 years?


If El Bulli was in the US that would be an interesting question, but for "normal" cuisine it doesn't match, I think.

For chains like McDonalds where they actually research and develop ways to make pink slime look like a burger, maybe? But do you call them chefs?


What is "Bloomstink"? Neither of your links references it, there are no references to the thing that makes sense when I do a web search.


Bloomberg




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