Podcast - Frazier & Deeter & iFOLIO CEO Jean Marie Richardson Section 174 Tax Code Impact on Tech
iFOLIO CEO Jean Marie Richardson joins Frazier & Deeter's podcast to talk the effect of tax code changes under Section 174
ATLANTA, GA / July 31, 2024 / - With changes to tax code section 174, Research and Development companies are adapting. Section 174 requires companies to allocate time each employee spends on new feature development so that expenses can be amortized. In the current software environment, the line between maintenance and new feature development is blurred.
The Context
As a result of the TCJA of 2017, Section 174 was modified, and the changes went into effect for tax returns beginning after 12/31/21. The old rules allowed immediate expensing of R&E costs. The new rules require capitalization and amortization of those same costs over a 5 year (for domestic R&E) or 15 year period (for foreign R&E). The bottom line? Although theoretically just a timing issue, the net result in the first five years is the potential creation of additional taxable income, thus potentially increasing net tax liability. For medium and smaller size companies this has truly hampered cashflow, and has many rethinking their short and long-term R&D plans.
"Today’s software companies are constantly pushing new features, improving security, and even fixing bugs. This is one of the many reasons software companies have done so well, they are constantly improving their product. Technology is absolutely an industry where if you are not getting better, then you're getting worse, standing still is not an option... iFOLIO will continue updating our platform and building new features. For example we have delivered to market more than 330 new features, bug fixes, and enhancements in the last 12 months. 174 is not going to keep us from doing that" said Jean Marie Richardson, CEO of iFOLIO.
About iFOLIO:
iFOLIO is an industry-leading software-as-a-service platform powering digital marketing and sales enablement clients across industries. The triple-patented technology powers viewers in 50 U.S. states and 100 countries and is WBENC-certified woman-owned.
Visit www.ifoliocloud.com to learn more or schedule a demo today at www.ifoliocloud.com/contact.
