The author does cover this point, further in the thread.

> An example:

> A company has $1.2M in revenue; and $1M in costs (let's assume all costs are employing devs fulltime).

> Before 2022: the profit of the company is $200K. Pays corporate tax on this.

> In 2022: the profit of the company is $1M (of the $1M in salaries paid for devs, this needs to be amortized over 5 years: so $200K can be amortized for the year). Need to pay corproate tax on this. But the business might not have this much cash on hand, and so needs to borrow at a high interest rate. MASSIVE change!

> ... and so now companies are incentivized to have as little R&D expenses as possible (aka fire fulltime devs doing R&D, unless they can front the 5-year spread).

https://twitter.com/GergelyOrosz/status/1735037956438523984

The tweet is correct.

In fact, page 2 , paragraph 1 of the IRS doc you linked to actually uses some of the same wording as the tweet does:

* (1) Former § 174(a)(1) provided that a taxpayer may treat research or experimental expenditures which are paid or incurred by the taxpayer during the taxable year in connection with the taxpayer’s trade or business as expenses which are not chargeable to capital account. The expenditures so treated were allowed as a deduction. *

While I would agree that the tweet's wording could have been better - and your quote is clearer - the tweet above is not wrong.

Ok but assuming equal software dev (or R&D) expenditures over time, for the first four years after this law takes effect, you will be paying more taxes. You've gone from being able to expense 100%, to only 20% in the first year, then 40%, then 60%, then 80%, then finally 100% again on year five.