TAG Tax

Contact: Teri Grumski; Cohen & Company (Ohio, USA)

The IRS issued new proposed regulations on January 20, 2015. These regulations are intended to provide guidance on how internally developed software applies to the R&D tax credit.

Generally in regard to the R&D credit, research with respect to computer software developed by the taxpayer primarily for internal use is not considered qualified research. However, it can qualify if the software meets certain conditions. The proposed regulations continue to stress (and further expand on) these conditions, but the proposed regs also further define internal use software and provide rules and a safe harbor for dual-function software.

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