Rec.Aviation OSH report

"Ron Wanttaja" wrote in message
...
On Tue, 1 Aug 2006 21:44:10 GMT, "Ken Finney"

wrote:

I am guessing that for tax purposes, calling it a "proof of concept" is
better than calling it a "prototype".

Don't know why it would make a difference, tax-wise.

My guess is that it's a combination of factors. "Prototype" implies it is
the
first aircraft of a series of aircraft, and Cessna may not yet have Board
of
Directors' approval to start production.

Also, if major changes have to be made (such as a switch to another
engine), the
"spin control" is easier with a "Proof of Concept." Big changes between
the
"Prototype" and the production aircraft implies some faulty decisions
during the
design process, but if you call it a "Proof of Concept" you can just
claim,
"Well, we were just trying different ideas, pushing the envelope, that
sort of
thing." Then you build a "prototype" that closely matches the production
model.

Ron Wanttaja

I live for tax law, but I've never owned a manufacturing company. ;^)

I'm guessing that a "proof of concept" is research and development, and
therefore deductable in the year it occurs, whereas the tooling etcetera for
a prototype would have to be amortized over time.