Comment by PaulDavisThe1st
2 years ago
I should add that's there is also vaguely middle-ground interpretation, which goes something like:
Way #1.5: if a company chooses to take R&D expenditures of any type as a deduction (which it is not required to do) then it MUST include software development expenses (which in turns means they will be amortized).
unless they aren't deducting software development at all
there is no obligation to take a deduction. if you find yourself in a circumstance where its more favorable to not take a deduction then you don't have to report that transaction
> unless they aren't deducting software development at all
What business does not deduct salaries from their income when reporting taxes?
I'm open to a counter-example where this makes sense.
There are special deductions you can elect to take for R&D expenses. If you choose to deduct R&D expenses, you must include software development there.
If you do not chose to deduct R&D expenses, you can deduct software salaries as normal.
I personally think this makes a lot of sense.
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if you have enough other expenses that already nullified that year’s tax, and it is complex to file a certain remaining kind of expense then you don't need to do it
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this is the whole crux of the matter. interpretation #2 says that the law now says that you MUST ("shall") consider all software development expense as R&D expenditures that are amortized over 5/15 years.
i personally believe that the intended/appropriate interpretation is #1 - you MAY consider software development expense as R&D and include in an R&D deduction if you choose to take one.
but it is far from clear what was intended and/or how the IRS interprets it.
that’s interesting well the IRS is going to get gutted anyway, I don’t see this particular issue being looked at with any scrutiny that requires litigation
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