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I don’t think you understand what they’re discussing. If you run a plumbing company, make $100K in revenue, pay a plumber $100K, you have no profits, owe no co
by kleinsch 3y ago
I don’t think you understand what they’re discussing.
If you run a plumbing company, make $100K in revenue, pay a plumber $100K, you have no profits, owe no corporate taxes.
If you run a software company, make $100K in revenue, pay a software engineer $100K, section 174, which just went into effect recently, means you now owe taxes on $90K of profit. This is because you must spread dev costs over 5 years, you can’t deduct them in the year they happened.
https://blog.pragmaticengineer.com/section-174/ https://blog.pragmaticengineer.com/section-174/
- nerdponx 3y agoI assume you meant 80k instead of 90k?
- moron4hire 3y agoThe code defines that you start with the midpoint of the taxable year, so even though it covers a five year period, it will also cover 6 tax years. Because of that, the first tax year (which was 2022), only 10% can be deducted. Tax years 2 through 5 is 20%. You can deduct the last 10% in the 6th tax year.
- deleted 3y ago[deleted]