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A Poem About a Tax Time Bomb

the world’s most unpopular tax change just went into effect.

but how, if both parties hate this law, did it still go through?

and why is everyone surprised that it actually happened?

and why does it affect businesses that aren’t profitable?

and what in the heavens can you possibly do about it?

we answer all of these questions and more below =]

how did this happen?

something had to pay for trump’s ‘17 tax cuts.

a tax time bomb, scheduled to go off in 5 years.

a terrible idea, but it balanced the budget perfectly.

and having it go into effect 5 years later bought time.

more than enough time for congress to repeal or delay it.

if both sides could get their act together and work together.

if everyone hates this law, how did it go through?

republicans + democrats agree this law had to be repealed.

but because both parties agreed on how terrible it is,

neither party could use it as a bargaining chip,

to get something else passed in return.

i wish i was joking — i am not =/

what does this mean for businesses?

companies can no longer write off r&d expenses.

(costs related to building or improving products)

this hits technology companies particularly hard.

of all sizes! baby startups that aren’t profitable,

up to raytheon cutting cashflow by $2b. yikes!

when taxes made sense, the math used to be:

$2m revenue - $5m expenses =  -$3m losses

the new math, starting tax year 2022, is now:

$2m rev - ($5m/5years → $1m) = $1m profit

worse, offshore r&d gets spread over 15 years:

$2m rev - ($5m/15y → $300k) = $1.7m profit

doesn’t the government want r&d?

the government is being a little schizophrenic.

on the one hand, r&d is rewarded with r&d credits.

on the other hand, r&d is punished with capitalization.

and those rewards + punishments are to differing degrees,

depending on each company’s revenues, expenses, NOLs, etc.

sounds like an optimization problem to me! to balance all of that out.

what can i do about it?

fortunately, this is the perfect problem for software to solve.

neo.tax connects to your accounting, payroll and business data,

then scans the universe of all possible tax outcomes for your situation,

to apply the tax strategy with the most optimal outcome for your business.

don’t file an extension to deal with this later

can you imagine getting an estimated tax bill from the irs,

then going back in time to adjust your tax strategy,

way after the fact as if that isn’t suspicious?

Calculate Your R&D Tax Return