Tell HN: Help restore the tax deduction for software dev in the US (Section 174)

Re:Tell HN: Help restore the tax deduction for software dev ... by gnopgnip on Monday June 09, 2025 @01:53PM (#44227121)

Normally when a business spends money producing a valuable asset, it is required to depreciate the cost to acquire the asset over the useful life. If a business pays people to create a new building, that is depreciated over 20 years. Even if it was paid for as salaries of employees, it isn't a special situation unique to software engineering.

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Re:Tell HN: Help restore the tax deduction for software dev ... by TulliusCicero on Monday June 09, 2025 @01:59PM (#44227211)

I don't think that's quite right? The value of the asset itself is depreciated over years, sure, but the payroll itself for the employees is just an immediate expense.

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Re:Tell HN: Help restore the tax deduction for software dev ... by phkahler on Monday June 09, 2025 @04:15PM (#44228945)

How can you compare a purchased asset to one you pay people to build?

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Re:Tell HN: Help restore the tax deduction for software dev ... by commandlinefan on Monday June 09, 2025 @02:12PM (#44227372)

But isn't the reasoning there that you could turn around and sell that building right away?

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Re:Tell HN: Help restore the tax deduction for software dev ... by gnopgnip on Monday June 09, 2025 @08:32PM (#44231221)

The reasoning behind depreciation is matching the income produced by the valuable asset, not really about resale value.

Presumably the value for tax purposes is based on the cost because the cost is harder to manipulate for something like software. Like some big box stores argue under the "dark store" theory they should be valued for much less because they have restrictive covenants banning competitors from using the property if sold, or that vacant property should be used as comparables.

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