Yea I just figured a bootstrapper is not going to take a salary in year 1.

But also seems like you could sidestep this by taking your salary as CEO rather than as a software developer or...something?

So I'm 6 years in as a bootstrapper.

Let's say I took a 500k year salary and paid 1M to my developers.

I always claim development as R&D.

I now need to pay taxes on (500k + .8 * 1M = 1.3M?) Despite only taking 500K salary? At some point I would owe more in taxes than I took in salary..

Assuming that your shop took in 1.5M in revenue, then yes it would be (500k + 0.9 * 1M) because for the first year you only get 1/10th of the deduction.

So it's like:

Year 1: 0.1 Year 2-5: 0.2 Year 6: 0.1