Businesses large and small are being hit by a change in tax rules on R&D expenses. Some are struggling to stay afloat.
For Yelp, the tax rule change potentially deters investment in R&D above what is needed to maintain the business, said Chief Financial Officer David Schwarzbach.Tristan Louis in January started preparing to file taxes for his software business. Expecting a bill in the five-figures, the Casebook founder was shocked to learn his tax liability for the nearly 50-person firm was over $400,000.
The 52-year-old, unsure the business would survive, scrambled to figure out how to come up with the cash to pay the taxes. The reality quickly became clear. Job cuts were needed and by early March, he had to cut staff by around 35%. “In our case,” Louis said, “it was really a question of life or death.”This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law.
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