Act now before it's too late: Section 174

This podcast is hosted by transistor.fm. Hello. Welcome to Build Your SaaS. This is the behind the scenes story of building a web app in 2023. I'm Justin Jackson, the cofounder of transistor.fm. And today on the call, I have Michelle Hansen, cofounder of Geocodio. And we're gonna be talking about something very exciting, which is section one seven four. Hi, Michelle. How are you doing? Hi. How are you? First of all, Michelle, last I heard from you, you were going into hibernate mode. And the way I understood hibernate mode was you were going to offload some of your side projects, you know, stop recording the podcast for a while, no writing of new books, nothing extra, not doing any public speaking. I'm just gonna relax. I'm gonna focus on me. I'm gonna focus on my family. I'm gonna focus on GeoCodio. What happened? Yeah. Oh, I wanna go back in my cave, man. Yeah. Section one seventy four is what happened, and I can't wait to go back into hibernate mode. Okay. Yes. Where it this was kind of I mean, it's not out of left field because it's this legislation's been proposed for a while. Maybe for folks who don't understand what section one seven four is, could you give a brief description and maybe then we'll talk about why it matters for small software companies. So what is section one seventy four? The very high level is that section one seven four, specifically what we're talking about is reverting section one seven four, is a part of The US tax code. So we are talking about, anyone who has a US business, that builds or sells software. And this is the part of the tax code that deals with what is called research and experimental, which is different than r and d. Okay. And, basically, for for, I wanna say, about seventy years, since this section came into being, software development was considered among this, research and experimental or R and E spending. Okay. And then what happened was and and under this section, you had the choice to either take all of those expenses immediately, which is to say, let's say you spent $10,000 last year, building a new product. You had server costs. You had icon libraries. You had a UI library. You had all this stuff that you used to build it. Right? That $10,000, you could choose either to take that as an expense right away, so that's negative $10,000 from your taxes, or you could choose to amortize it, which is basically have it spread out over many years, which is, like, something you hear very commonly about computers. Right? Like Mhmm. All of us kind of know, like, if you buy a new laptop, you don't get to take off a 100 percent of that in the year that you bought it. That has to be spread out over many years because you get, you know, five years, of …