Thinking about it more, perhaps it's a mistake to assume that the software being written has a service lifespan of five years.
If they spent a million, made a million, and are now back to square one, it would make more sense to not amortize the investment because it's not an investment.
It's also pretty harsh on a business that's just plain unprofitable. The laws should be arranged so that if you start a business and it's a flop, but you have no debts, you can walk away pretty much unscathed.
In theory, but good luck getting a loan secured against IP for a reasonable rate.
Honestly this is a bit like SVB all over again - poor management, in this case not knowing or understanding critical tax laws. And if you did know, shame on you for not contingency planning for Congressional ineptitude.