Comment by bcrosby95
2 years ago
I could see the argument for perennial still falling under #2: usually in perennial software, you're still building on top of that base you already developed. Basically any SAAS makes sense under #2 to me, despite how much it may suck.
But the contracting work I've done (custom, one-off software) wouldn't make sense under #2, and I don't know how it actually works under this change.
If your contracting work is "company X hired me to write software Y" then any of your expenses (salaries, etc.) are normal expenses. For company X, Y is probably R&D (or a capital asset) and need to be amortized, as #2.
Just like if Ford hires you to build a factory - the amount you pay the plumber is a regular expense, but the bill to Ford is for a capital asset.
> usually in perennial software, you're still building on top of that base you already developed.
Sure, but is revenue tied to work already done, or ongoing work? I.e. are you leveraging prior capital expenditure to realize current revenue, or are you in fact building new stuff right now (updates, features) that will generate right now (or at least, well within the 5/15 year amortization schedules) ?
The fact that the current work relies on earlier work is not in itself an argument that the earlier work was obvious done as a capital investment.