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Tl;Dr: in the past, if you hired developers and made no money, you could choose to either classify that work as R&D or Maintenance.

From a business perspective it matters because R&D gets written off until it becomes profitable, but maintenance is for long-term on software that's in production, so you amortized the maintenance over 5 years if you see it that way, if you're making money now, but you wouldn't amortize the R&D because it isn't making money and that's just a way to get yourself a big tax bill with no way to pay it. It was an option. No longer, all one bucket now.

I'm probably oversimplifying but today, with the S174 updates in effect, you don't have this choice. If it's classified as either, it gets amortized over 5 years, unless it's developed outside of the country then it's 15. Either way it's a massive tax bill because you had to have revenue to pay the devs and that revenue gets taxed in the first year now, where you could have written it off before all this.

This leaves very little room for speculative investments in R&D that were actually quite incentivized before S174.

We called it an investment and showed no profit, paid no taxes (except for the payroll taxes, social security taxes, all the other taxes which you obviously still can't avoid through paying employees in whatever locality they are working based out of...)

So the net effect of S174 is (we seem to be observing) that organizations with large developer footprints are now figuring this out a bit too late and laying off some or all of that staff pool to try to dig themselves out of this before it's really too late. You can't invest in research unless it's gonna pay off this year or you have some sort of money tree to use to pay for it and pay taxes on it. That makes it hard to see as an investment unless you are able to become profitable today.

The worst part is nobody seems to get it in the food chain. My (former) boss is barely aware of this issue, my CEO hasn't brought it up, but I am laid off and all my coworkers are. We are nearly all software developers. I have to assume it's related, until I can find another software developer job that isn't going through the same thing.