3 ms·

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 upda

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.

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.