Essentially as long as it’s never shown to anyone and considered a non viable product they can claim the budget which was lost against their profit when doing taxes.
It lowers the amount of profit it looks like they had that year and this reduces the taxes they owe.
This is done in lots of industries all over the place, grocery stores toss lots of food and mark it for loss to keep taxes low as long as you never lower the costs so cheap that it isn’t worth it. Electronic components as well, chips being a usual one for throwing some away to quickly lower profits.
Thanks for the concise explanation and clarifying its broader than this industry. I love finding out all the unique ways we align incentives against humanity/ reality. Is there any reason why a rule like this might actually help? Or is it the typical “there was a real reason at one point, but now its just a loophole being abused”?
Essentially as long as it’s never shown to anyone and considered a non viable product they can claim the budget which was lost against their profit when doing taxes.
It lowers the amount of profit it looks like they had that year and this reduces the taxes they owe.
This is done in lots of industries all over the place, grocery stores toss lots of food and mark it for loss to keep taxes low as long as you never lower the costs so cheap that it isn’t worth it. Electronic components as well, chips being a usual one for throwing some away to quickly lower profits.
Thanks for the concise explanation and clarifying its broader than this industry. I love finding out all the unique ways we align incentives against humanity/ reality. Is there any reason why a rule like this might actually help? Or is it the typical “there was a real reason at one point, but now its just a loophole being abused”?