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No, that's literally the Section 174 change. You now must count them as R&D.

The relevant paragraph from Section 174:

> (3) Software development

> For purposes of this section, any amount paid or incurred in connection with the development of any software shall be treated as a research or experimental expenditure.

https://www.law.cornell.edu/uscode/text/26/174






So that would include everything? - cloud/hosting expenses - system administrators/devops engineers and their laptops, workstations - project management software, office software, support, etc - project managers, designers, technical writers, qa engineers - software licenses, domain names, certificates, etc - internet bandwidth, data-centers, HVAC, backups

What "in connection with" means is vague. I think a reasonably competent tax attorney could probably argue that the costs of running your production cloud serving existing customers don't count, but IANAL.

What if some executive tweaks a "no code" tool? Technically, the name says that there's no coding involved.

Presumably that still counts as "developing software"- the regulation doesn't mention "coding" at all.

A fair point.

Or is it "using software"?

A person typing an essay with a word processor in doing more work than many of the users tweaking no code software.


A person typing an essay with a word processor is producing an essay. A person using a no-code tool to modify a software process is producing software processes.

The nature of the tweak involved probably determines the classification of the effort, but for tax purposes and R&D expense amortization, it is a percentage of time basis.

If the executive tweaks the code once, the percentage is so small it won't count as far as anyone cares.

If 20% of the executive's time is tweaking the tool, then odds are the company cannot expense 20% of the executive's salary and instead must claim that portion as R&D over five years.

Back before 174, I worked for a company that did claim R&D but only for one of the projects I worked on. As such, I had to be careful filling out my timesheet because they wanted an accurate accounting of what was salary expense and what was R&D.


what if you don't call it "software development"?

how about "business process mechanization"?


At that point you’re so into tax fraud that you light as well call them “postage and shipping”

Then you risk going to jail.

I mean sometimes fraud works, sometimes it doesnt.



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