If you haven't talked to your accountant about this already and employ engineers, talk to your accountant *immediately* because the sticker shock needs to be seen to be believed.

This will cause those businesses tax accounting to show "artificial" profits in the first ~4 years of the adjustment period, beginning this in tax year 2022, and then they will be taxed on those virtual profits *immediately* despite them not corresponding to cash actually earned.

The very short version of the issue is a 2017 change in an obscure part of the tax code that was essentially ignorable by many small companies caused all software development expenses, including salaries, to need to be depreciated and not expensed.

I will probably write about Section 174 depreciation changes and the impact on small software companies and startups in the future, but in the meanwhile, @mjwhansen is organizing a letter to Congress to encourage them to modify policy sensibly. ssballiance.org/