It's an IRS code change, not FASB. FASB doesn't oversee taxation at all. Section 174 is strictly a tax issue.
It's an IRS code change, not FASB. FASB doesn't oversee taxation at all. Section 174 is strictly a tax issue.
When viewed through this lens, are growing companies trying to have their cake and eat it too - get the boost to GAAP net income for stock comp purposes etc, but defer the cash tax to future years. This perspective ties everything together for me, in terms of understanding the incentives of the players here.
I think the other piece mentioned elsewhere is the very real cash flow implications for fast growing companies, in particular those that might be smaller and with more limited access to financing (which also isn't free...). And the idea that it's a pretty blunt tool... 5 yrs for all development... every product is different and as others point out lifecycles are often much shorter.
Mind restating those, for those of us without the financial background who are struggling to digest these insightful comments?
While one of the biggest differences between GAAP and tax is the depreciation schedules for various assets, the definition of the items is generally the same.