Cite as: Real Problem AI problem “Why does Section 174 turn every two-person startup into a part-time tax department?”. Opportunity score 8.3 out of 10 (severity 8, AI feasibility 8, market signal 8, competition gap 9). Category FinTech. Trend LLM. Source signal: r/startups, Hacker News, and Twitter founder threads on Section 174 pain.. Canonical URL: https://www.realproblem.ai/archive/why-cant-a-us-founder-track-section-174-rd-capitalization-across-contractor-invoices.
Why does Section 174 turn every two-person startup into a part-time tax department?
Post-2022 Section 174 forces SaaS startups to capitalize R&D over multiple years, but Gusto and Mercury do not tag which engineer hours or contractor invoices count as specified research, so founders rebuild the schedule in a spreadsheet at tax time.
Who has it: Pre-revenue YC or seed-stage SaaS founder.
- Severity8/10
- Feasible today8/10
- Market signal8/10
- Competition gap9/10
What people report
Founders describe their CPA asking what share of each engineer's and contractor's time was qualified research for Section 174, and neither the founder nor the CPA knowing how to answer.
Our summary of a complaint that recurs in public posts, not a quote. Nobody submitted it to Real Problem AI.
Seen in: r/startups, Hacker News, and Twitter founder threads on Section 174 pain.
What nothing does yet
An LLM agent that reads Linear, GitHub, and Jira activity per engineer, classifies time as QRE vs maintenance vs sales engineering, and builds the rolling Section 174 amortization schedule synced with Gusto and Deel payroll.
Tools that solve this
3 named so far, and where each one stops.
- Pilot.com
Books only, hands the Section 174 schedule back to the founder.
- MainStreet
Focused on R&D credit Form 6765, not Section 174 capitalization.
- Neo.tax
Credit-side, light on Section 174 amortization tracking.
Why it is archived
Retired in the 25 October 2026 freshness refresh: an older or overlapping problem replaced by a newer one people are discussing now.
How you might build it
- 01GitHub plus Linear plus Jira activity ingest
- 02LLM classifier for QRE vs non-QRE work
- 03Gusto plus Deel payroll sync
- 045 and 15 year amortization schedule generator
#F17 · Canonical URL: https://www.realproblem.ai/archive/why-cant-a-us-founder-track-section-174-rd-capitalization-across-contractor-invoices