Comment by scrozier

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.