The prediction matches what actually happened.

1. The fix did stall past April 15, 2024. A $78B bipartisan tax bill (including restoration of immediate R&D expensing under Section 174) passed the House in January 2024 but remained stuck in the Senate as Americans filed by the April 15 deadline, and senators themselves warned it might be “too late” to salvage it for that filing season. (wsj.com) Later reporting shows the Senate effectively killed this bill, so no broad retroactive R&D fix for 2022–2023 passed in that Congress. (wsj.com) During 2023–2024 filings, businesses therefore had to capitalize and amortize R&D over five or fifteen years instead of expensing it immediately.

2. Many small, R&D‑intensive firms did experience significant financial strain from this rule (i.e., taxes on “phantom” profits).

   • A 2025 survey of founders by startup bank Mercury found that 73% said the R&D amortization change had a negative financial impact, and 44% reported operational changes such as cutting R&D budgets, slowing or reducing hiring, delaying/canceling projects, offshoring, and even layoffs. (mercury.com) These respondents are predominantly tech startups.
   • The U.S. Chamber of Commerce reports that, since mandatory R&D amortization began in 2022, many small and midsize businesses have suffered cash‑flow and liquidity problems and been forced to take high‑interest loans, raise prices, and stop hiring just to pay their higher tax bills. (uschamber.com)
   • A Senate small‑business roundtable summarized survey data showing a median 32% increase in tax bills (about $59,000) for small firms subject to the new R&D rules; 35% had to borrow to pay the tax, and 19% said their firm might go out of business, with additional impacts like reduced investment, hiring cuts, and layoffs. (congress.gov)
   • Industry letters (e.g., from manufacturing and startup groups) describe the R&D amortization requirement as causing “significant cash flow impacts” on startups and small businesses, forcing them to delay investments, forego hiring, and take out loans, and warn that “tens of thousands of jobs are at risk” if it remains. (nffs.org) The National Defense Industrial Association specifically notes that losing most of the R&D deduction creates dramatically higher tax bills that many companies, especially small defense‑related businesses, will struggle to manage, tying it to national‑security supply chains. (nationaldefensemagazine.org)
   • Policy and news analyses on Section 174 explicitly explain that amortization can make unprofitable startups appear profitable for tax purposes, resulting in tax bills despite having no real earnings — the textbook definition of “phantom” taxable income. (axios.com)

3. Timing relative to the 2023–2024 tax years. The amortization requirement has applied since tax years beginning in 2022, so its first big impact hit 2022 and 2023 returns (filed in 2023 and 2024), with continuing effects into 2024 filings, precisely the window the prediction referred to. (cbh.com) A later 2025 reform (creating new Section 174A and allowing some retroactive small‑business relief via amended returns) only arrived after this period and does not negate the substantial cash strain and operational damage many small tech, life‑sciences, and defense‑related firms reported during 2023–2024.

Given (a) the confirmed Senate stall beyond April 15, 2024, and (b) strong empirical evidence that a large number of small, R&D‑intensive U.S. businesses faced large tax increases, cash‑flow problems, borrowing needs, and cuts to R&D and hiring because of Section 174 amortization, the prediction that this stall would “hurt a lot of small businesses” through taxes on phantom profits is best judged right.