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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 75.19

-0.1%

Jan 16 3:59 PM EST

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To: Cynic 2005 who wrote (21202)	1/26/1999 9:05:00 AM
From: nihil	Read Replies (1) of 77400

IRC 41(f) doesn't look as if it gives IRS control over the acquirer's decision. Ultimately, it goes to tax court, and if acquirer can show that the R&D has no immediate benefit to the acquirer, it can be written off as above basis. The basis R&D costs are capitalized, and the capitalized R&D of the acquired company can normally be written off. IRS has been getting shirty. The writeoff reduces acquirer's earnings this year, and raises future earnings only if some of the written-off R&D has value. But that's what the R&D write-off was all about -- to increase the inducement of firms to engage in R&D. (1980). How are capitalized R&D costs future costs? Capitalized R&D amortizations are not "real costs." They have already been incurred, but the stupid tax laws won't allow them all to be deducted at the time incurred. Why should I be allowed to deduct the cost of a computer (costed) but not deduct the R&D cost of building my own? Stupid law that violates the economic rules and slows down economic growth and keeps people using obsolete crap because they can't deduct the abandoned cost and use the credits for buying neat new stuff or doing R&D.

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