If correct, this is a good thing on a generally bad, overstuffed bill. Immediate expensing never should have been changed in the first place, and it was always weird seeing people twist themselves in knots defending it.
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This is indicative of ignorance. There is a reason why we have these rules.
Fundamentally there are reasons why we don't allow companies to funnel all operational profits into capital assets without them paying taxes.
An analogy would be a company that used all their profits to extract gold from the ground such that they get the labor worth of gold out. In doing so they would effeciently dodge paying taxes of their profits.
Now back to your comment: you portray it is as only good that this law was changes . And in doing so you leave out these details that essentially leads to instantiating laws like these.
In your example, they still own all the gold and would eventually pay taxes on any liquidation.
I bring this up because I, too, am as interested in your parent to know the original inspiration for these parts of the tax code…
Further: I have a suspicion that this should be applied differently to C-corps vs. pass through entities in the same way that corporate taxes and retained earnings are…
You could also just don't allow to deduct taxes on the work out into digging out the gold.
In the end I do not care. But i feel like people would be equally ignorant if it was proposed to tax the software in other ways (eg VAT on the derived services from operating).
Regardless, these are the discussions to have.