I realize this doesn't apply to Upwork, but don't the new U.S. tax laws discussed in https://news.ycombinator.com/item?id=35614313 prevent companies from writing off development costs, meaning they are taxed on the gross revenues (at least for that year)
No, they have to capitalize (or amortize) development expenses over a 5 (domestic R&D) or 15 year (foreign R&D) period instead of getting to deduct them currently (meaning in the year incurred).
Due to the way depreciation works, development is treated as incurred mid-year regardless of when in the taxpayer's tax year they are actually incurred, so the ultimate effect is that only 10% of the development costs can be deducted in the first year, 20% for the next 4 years, and 10% in the final year (6th calendar year after incurring cost, due to the deemed mid-year start in the first year).
