That isn't how the IRS defines it though. Essentially anytime software is being "developed" they will let you classify it as "R&D" (well you can claim the 174 R

That isn't how the IRS defines it though. Essentially anytime software is being "developed" they will let you classify it as "R&D" (well you can claim the 174 R&D expense deduction but not the R&D Tax Credit under Section 41 which requires activities closer to what you describe). > Section 5 of Rev. Proc. 2000-50 provides, “The costs of developing computer software (whether or not the particular software is patented or copyrighted) in many respects so closely resemble the kind of research and experimental expenditures that fall within the purview of section 174 as to warrant similar accounting treatment.” As a result, “the Service will not disturb a taxpayer’s treatment of costs paid or incurred in developing software for any particular project, either for the taxpayer’s own use or to be held by the taxpayer for sale or lease to others,” where the taxpayer either treated the costs as currently deductible expenses under former Sec. 174(a) or capitalized and amortized them under former Sec. 174(b) (id.).