Exactly. And I do think the truth lies somewhere in the middle - some software development creates capital assets, but lots does not.
And either way it's very painful to change the rules entirely in a single tax year, especially for small businesses. FAANG companies will weather this either way, but it could kill small software businesses.
agreed. It is quite backbreaking if you dont have a huge bucket of money.
One alternative if it must be treated as a capital asset is to allow accelerated/immediate depreciation for small firms and individuals.
I can see the point that for large firms like with diversified R&D portfolios, development, on average, results in creation of capital assets.
For small firms, it is absolutely unclear that the product has any durable value at all.
Obviously, the question is then which one makes more sense for software development.