Spend a month managing kubernetes clusters (not R&D), do one commit to a custom operator or library you're "researching" and boom, magic money.
For Development?
Yeah, committing to a library isn’t research, but it is very clearly development.
You may not want this kind of development to receive tax breaks, which is a reasonable position to have, but this rhetorical trick of pretending R&D is only about research to pretend actions that are very clearly development are somehow illegitimate R&D is highly misleading to say it nicely.
That's pretty far off keep-the-lights-on or CRUD coding.
R&D is not tax deductible, so the cheat would be to say the custom operator (=R&D) is maintenance and therefore OpEX and a fully deductible expense.
The entire problem is that software companies hire workers and need to deduct salaries in the month they are paid. The 5 year R&D rules basically say that your salary in one month must be tax deducted over five years. If your business is breaking even and making no net profit, you would now have to pay taxes, which turn your "break even" business into a loss making business.
There is no situation where the old rules let you get away with paying less taxes than you should. The rules simply affect the timing of the tax deductions.
The new tax rules basically assume every business has infinite access to 0% interest loans to bridge over temporary tax induced insolvency.
It's weirder that you spend money on R&D today & then get a 20% for 5 years in a row, no? You've spend money, but also can't deduct it from your profit so you're both spending money and paying taxes on that money as if you had it.
personally, i think amortization is generally stupid and all expenses should come off income at time of accrual with the exception of a matching amount to net debt change over the year, but i am a dreamer.
> Section 5 of Rev. Proc. 2000-50 provides, “The costs of developing computer software (whether or not the particular software is patented or copyrighted) in many respects so closely resemble the kind of research and experimental expenditures that fall within the purview of section 174 as to warrant similar accounting treatment.” As a result, “the Service will not disturb a taxpayer’s treatment of costs paid or incurred in developing software for any particular project, either for the taxpayer’s own use or to be held by the taxpayer for sale or lease to others,” where the taxpayer either treated the costs as currently deductible expenses under former Sec. 174(a) or capitalized and amortized them under former Sec. 174(b) (id.).
Old industries - get paid for doing the actual work
Enterprise SW - get paid for automating things
Software companies - get paid for writing COTS (Commodity of the Shelves) software
Sharing economy startups - get paid percentage of every transaction in a specific marketplace