Comment by scrozier
3 years ago
That could well be. But maybe it's not so obviously a good thing as it may sound to startup ears. Matching income and expenses is a pretty good way to keep your financial head about you.
3 years ago
That could well be. But maybe it's not so obviously a good thing as it may sound to startup ears. Matching income and expenses is a pretty good way to keep your financial head about you.
> That could well be.
No, it is. That's literally why this happened, it was used as a bargaining chip/to buy time and they never cleaned it up. It's not supposition or a guess, it's the stated intent and consequence.
> it's not so obviously a good thing
Let's say you earn a million dollars before salary and you have 10 engineers working for you each making $100k. You pay out your salary and have $0 profit at the end of the year.
With this change, you are taxed as if you made $800k profit, so unless you've got a couple hundred grand in your bank account this is easily enough to bankrupt a business and put those 10 engineers out of work.
It would be one thing if the $800k was in the bank and this was Hollywood accounting to make it seem like it's not profit. But this is money that was paid to employees and now the business is expected to pay taxes on it as if it was never paid. It's absolutely farcical how anyone could look at this and not see it as ridiculous.
I think you're just missing the whole venture capital/startup ecosystem concept. VCs and founders are well aware of accounting principles and can/should plan accordingly.
BTW, I founded and ran four companies and faced this very situation plenty of times. In my day (this was a while ago), we generally had to, or did, amortize development costs. I'm not saying I loved paying the tax bills, but the concept is neither farcical nor ridiculous.
> No, it is. That's literally why this happened, it was used as a bargaining chip/to buy time and they never cleaned it up. It's not supposition or a guess, it's the stated intent and consequence.
Unfortunately, I think a lot of hacker news posters give plausible deniability to that leadership in order to avoid cognitive dissonance with how certain political leaders that they support are not business friendly at all.