Ok, this is a very interesting and in-depth overview of the modern realities of software development.
One thing that strikes me is how this is similar to how a factory operates. While the existing tooling certainly is used for mass production, it is also regularly retooled for new requirements. These might be small changes, involving only a few minor molds or stages, or very large ones, involving complete replacement of whole sections. These operations also face the shifting sands of obsolescence and modernization, as well as changing market requirements.
It seems reasonable that all the expenditure to create the current tooling of the manufacturing plant is a capital expenditure, even tho, like software, it is never "Done", but rather in a constant state of progress and development. All of these iterative changes are likewise much akin to a form of research, albeit incredibly practical and occuring right where the rubber meets the road.
The modern picture of software development and operations you very clearly layout makes this capex framing more imperative and reasonable than before, despite not producing "done" assets. While it's certainly true that installation costs, bug fixing, and testing during production are not easily seen as capital expenses, it sounds reasonable that the other work to produce these production assets really is capex.
It also seems as if the IRS guidance already specifies this distinction, with the former category being specifically excluded from the proposed rule changes. Thank you for this very engaging and informative discussion! :)
One thing that strikes me is how this is similar to how a factory operates. While the existing tooling certainly is used for mass production, it is also regularly retooled for new requirements. These might be small changes, involving only a few minor molds or stages, or very large ones, involving complete replacement of whole sections. These operations also face the shifting sands of obsolescence and modernization, as well as changing market requirements.
It seems reasonable that all the expenditure to create the current tooling of the manufacturing plant is a capital expenditure, even tho, like software, it is never "Done", but rather in a constant state of progress and development. All of these iterative changes are likewise much akin to a form of research, albeit incredibly practical and occuring right where the rubber meets the road.
The modern picture of software development and operations you very clearly layout makes this capex framing more imperative and reasonable than before, despite not producing "done" assets. While it's certainly true that installation costs, bug fixing, and testing during production are not easily seen as capital expenses, it sounds reasonable that the other work to produce these production assets really is capex.
It also seems as if the IRS guidance already specifies this distinction, with the former category being specifically excluded from the proposed rule changes. Thank you for this very engaging and informative discussion! :)