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> • data conversion activities, except for activities to develop computer software that facilitate access to existing data or data conversion ex: linking excel

> • data conversion activities, except for activities to develop computer software that facilitate access to existing data or data conversion ex: linking excel spreadsheets or setting up excel to ingest data from a sharepoint or network drive would still fall under the definiton of software developer > • maintenance activities after the taxpayer places the computer software into service So a sysadmin or a DB admin writing scripts or a DB admin writing queries and adding new reports would be considered software development It just seems way too easy for arbitrary employees to get pulled in under this definition because it just fundamentally misunderstands how widespread programming is.

raverbashing 1y ago
You missed the paragraph saying that maintenance activities are not considered development activities
- OneDeuxTriSeiGo 1y ago
  But that's the rub right? What is the definition of maintenance activities? And for what software? If you are writing a new script to automate something or updating an existing script, is that not software development? If that's considered maintenance activities then would maintaining a software codebase not be considered maintenance activities then?
  - dgfitz 1y ago
    In my simple mind, if software has been "released" it is no longer R&D, and "bug fixes" (which should include continuous improvements such as your example) are not research. I may be way, way wrong though.
    - jandrese 1y ago
      That seems too exploitable to pass muster in the court. If you release Beta 0.0.1 of your software after 2 months of development then spend the next 5 years getting it up to version 1.0 that's clearly a development effort not a maintenance effort.
      - tomrod 1y ago
        Is it?
      - shakna 1y ago
        > such as marketing and promotional activities, maintenance activities that do not give rise to upgrades and enhancements, distribution activities If it leads to a new release, then its software dev. Meaning anything more than a minor patch is going to count.
      - hansvm 1y ago
        That's the reason we have courts, to cut through those gray areas.
        andrewlgood 1y ago
        No. That is why you have auditors who must sign off on your financial books and records. There are fairly strict rules about capitalization of software development. If it is a meaningful number for your firm, then the auditors will review in detail.
  - jamessinghal 1y ago
    The IRS Guidance says this in 5.05(2), which is most relevant to software startups: (2) Computer software developed for sale or licensing to others. In the case of computer software that is developed for sale or licensing to others (or upgrades and enhancements to such software), activities that occur after such software (or upgrades and enhancements to such software) is ready for sale or licensing to others, such as marketing and promotional activities, maintenance activities that do not give rise to upgrades and enhancements, distribution activities (for example, making the software available via remote access), and customer support activities. So they are maintenance as long as they "do not give rise to upgrades and enhancements", which would be the responsibility of the taxpayer to track. I'm sure there is more nuance to it in practice.
    - JumpCrisscross 1y ago
      Has the IRS actually dinged anyone for fucking with how they categorise software expenses?
      - Spooky23 1y ago
        They have, but they’ve fired everyone. Literally. I have a relative who was fired while testifying in court, he ended up stranded in some flyover shithole. The real issue is the auditors will flag it.
        JumpCrisscross 1y ago
        > auditors will flag it For tax books?
        tough 1y ago
        llm auditors soon
  - hattmall 1y ago
    The concept and determining factor is how it relates to revenue. Is it an activity that supports or contributed to current revenue generation, or is it something that is expected to only contribute to future revenue generation.

raverbashing 1y ago

You missed the paragraph saying that maintenance activities are not considered development activities

OneDeuxTriSeiGo 1y ago
But that's the rub right? What is the definition of maintenance activities? And for what software? If you are writing a new script to automate something or updating an existing script, is that not software development? If that's considered maintenance activities then would maintaining a software codebase not be considered maintenance activities then?
- dgfitz 1y ago
  In my simple mind, if software has been "released" it is no longer R&D, and "bug fixes" (which should include continuous improvements such as your example) are not research. I may be way, way wrong though.
  - jandrese 1y ago
    That seems too exploitable to pass muster in the court. If you release Beta 0.0.1 of your software after 2 months of development then spend the next 5 years getting it up to version 1.0 that's clearly a development effort not a maintenance effort.
    - tomrod 1y ago
      Is it?
    - shakna 1y ago
      > such as marketing and promotional activities, maintenance activities that do not give rise to upgrades and enhancements, distribution activities If it leads to a new release, then its software dev. Meaning anything more than a minor patch is going to count.
    - hansvm 1y ago
      That's the reason we have courts, to cut through those gray areas.
      - andrewlgood 1y ago
        No. That is why you have auditors who must sign off on your financial books and records. There are fairly strict rules about capitalization of software development. If it is a meaningful number for your firm, then the auditors will review in detail.
- jamessinghal 1y ago
  The IRS Guidance says this in 5.05(2), which is most relevant to software startups: (2) Computer software developed for sale or licensing to others. In the case of computer software that is developed for sale or licensing to others (or upgrades and enhancements to such software), activities that occur after such software (or upgrades and enhancements to such software) is ready for sale or licensing to others, such as marketing and promotional activities, maintenance activities that do not give rise to upgrades and enhancements, distribution activities (for example, making the software available via remote access), and customer support activities. So they are maintenance as long as they "do not give rise to upgrades and enhancements", which would be the responsibility of the taxpayer to track. I'm sure there is more nuance to it in practice.
  - JumpCrisscross 1y ago
    Has the IRS actually dinged anyone for fucking with how they categorise software expenses?
    - Spooky23 1y ago
      They have, but they’ve fired everyone. Literally. I have a relative who was fired while testifying in court, he ended up stranded in some flyover shithole. The real issue is the auditors will flag it.
      - JumpCrisscross 1y ago
        > auditors will flag it For tax books?
      - tough 1y ago
        llm auditors soon
- hattmall 1y ago
  The concept and determining factor is how it relates to revenue. Is it an activity that supports or contributed to current revenue generation, or is it something that is expected to only contribute to future revenue generation.