You only get taxed on the revenue. So no, if you don't have revenue, you're not paying taxes. But all those businesses CAN deduct their expenses, and only pay taxes on profit.
Software is now in the unique position of being required to pay taxes on revenue instead of profit. If you spent $5M on development and raked in $100k, you'll be taxed on $100k (minus expenses, where the $5M must now be spread over 5 years). Of course, with those numbers, the company might want to spread costs over 5 years anyway (which they could already do).
So really, it's as if the tax code is specifically targeting bootstrapped companies that are reinvesting their profits back into the company. IMHO, the worst possible option of any that could have been chosen to milk software companies. Large established companies can afford it, VC companies were going to amortize anyway.
Yeah, you "eventually" can expense your costs. But that just means that it's a tax grab on the smaller companies that will be put out of business by this move. They pay all the tax this year, go out of business, and never get to reap the profit of the development work.
Software is now in the unique position of being required to pay taxes on revenue instead of profit. If you spent $5M on development and raked in $100k, you'll be taxed on $100k (minus expenses, where the $5M must now be spread over 5 years). Of course, with those numbers, the company might want to spread costs over 5 years anyway (which they could already do).
So really, it's as if the tax code is specifically targeting bootstrapped companies that are reinvesting their profits back into the company. IMHO, the worst possible option of any that could have been chosen to milk software companies. Large established companies can afford it, VC companies were going to amortize anyway.
Yeah, you "eventually" can expense your costs. But that just means that it's a tax grab on the smaller companies that will be put out of business by this move. They pay all the tax this year, go out of business, and never get to reap the profit of the development work.