Why is it that tracking expenses as R&D is bad? Where I work, we started tracking our R&D hours compared to other work recently, and an increase in R&D hours has resulted in less tax burden.
Edit: not sure why the downvote, it's an honest question. I'm not arguing anything.
Having to pay taxes earlier hurts liquidity. This is particularly problematic for small companies growing quickly, such as startups. For VC financed companies it means that they need to raise the money to pay the ta when they're still smaller, and thus have a lower valuation.
Thanks for the simplified explanation. It does make me question though whether this is really fueling layoffs at larger firms like Meta and Microsoft. Why wouldn't they be fine with paying the tax hit early?