Comment by monster_truck
12 days ago
I've spent 0 seconds googling this so excuse the dumbfuck question but: is there any precedent or convention for writing off the stolen goods as losses? I'm pretty sure physical goods from businesses qualify but what about this??
Physical/digital has the same answer, just different effect.
As a general rule, you can write off what it costs for you to make something, but not what you lose from not being able to sell it.
Which means for physical goods, you write off the cost to make them, and for digital goods, you can similarly usually deduct development cost to make the software.
In neither case can you write off the amount you would have made had it not been stolen/sale had not been lost.
The practical effect is that because physical goods have a per-unit to-make cost, and most digital goods don't, physical goods get written off per-unit-lost and digital goods do not.
At least, this is the most general answer I can give you for that level of general question.
Could you just make a CICD process that for each minting of a software license it cost a person's time to review and accept and then the wages for that individual become the write off. I.E. Convolute the software delivery process so that like a physical good, it has a per-unit to license cost to recoup. Or would that be argued as it could have just been automated and it's not really a real loss leader just bad policy?
You don't lose this time for pirated copies of your software, as I assume you aren't taking this person's time to create a license for pirates.
To write something off you have to actually lose the money - writing off is a process to decrease your taxable income by your expenses, unless you're inventing fake expenses (read: performing tax fraud) it doesn't generate a greater amount of money than the expenses.
Why would you incur additional expenses just to be able to write them off?
Digital losses to piracy sounds like something that would be impossible to quantify.. even if they can prove that people are downloading these pirated copies, that's not proof that the downloader was ever going to pay for the software in the first place.