Recent software layoffs are the result of S174 tax law passed in 2017

[Sheri]

10 hours ago, paaparao said:

 

employee salaries expenses kindane vosthayi kada. they are fully deductible. those costs are not taxable.

R&D expenses need to be claimed for tax credit over 5 years as per change effect from 22 year. it is done due to software companies are writing off entire software development as R&D expense including features upgrade, addisiton of functionality and support packages cost. This is creating unfair disadvantage for non-software companies which typically spends only less than 10% in R&D in their annual revenue. 

anduke software companies thoka cut chesaru. 1 year lo claim chesukone badulu 5 years paatu cheyali. 

 

R&D ki incentives theesesthe inka startups asalu untaya? Innovation ki gatti debba ne idhi. 

[Sheri]

9 hours ago, Konebhar6 said:

Good article. I am aware of this but I did not realize that it has this much of impact on the layoffs. It does make sense.

The rules to capitalize (CCA and Capex) and OPEX have changed significantly in recent years. I do know that our IT budget got reduced because of the 5-yr amoritization rule. It used to be 10 years before I guess. 

Employer salaries ni amortize cheyadam ento. Entha R&D ayina salaries OPEX kinda ke raavali, CAPEX kindaku kaadu. Ippudu Inka software engineering ki Ikkada demand thaggipothundi. Salaries kuda mostly thaggistharu.

[Konebhar6]

32 minutes ago, Sheri said:

Employer salaries ni amortize cheyadam ento. Entha R&D ayina salaries OPEX kinda ke raavali, CAPEX kindaku kaadu. Ippudu Inka software engineering ki Ikkada demand thaggipothundi. Salaries kuda mostly thaggistharu.

Well said. Maa company lo kuda timesheets pettaru. We gotta pick the type of activity we do in a week so that it’s categorized as CAPEX and OPEX. Most of it being CAPEX. It’s good for the businesses for tax breaks it seems.