It's an interesting question, first of all it varies by country and I guess even by state (or whatever equivalent your country has). I found the following link

It's an interesting question, first of all it varies by country and I guess even by state (or whatever equivalent your country has). I found the following links: https://www.cspcpa.com/2012/07/17/overview-of-tax-rules-for-software-purchases-and-development-costs/ https://www.cspcpa.com/2012/07/17/overview-of-tax-rules-for-... http://www.nysscpa.org/cpajournal/2002/0402/features/f044602.htm http://www.nysscpa.org/cpajournal/2002/0402/features/f044602... Edit: Stanford link http://web.stanford.edu/group/fms/fingate/staff/capitalequip/capital_software.html http://web.stanford.edu/group/fms/fingate/staff/capitalequip... "The IRS says the costs of developing computer so closely resembles research and experimental expenses that it warrants similar accounting treatment. As a result, a taxpayer may use any of the following three methods for costs paid or incurred in developing software for a particular project, either for the taxpayer’s own use, or to be held by the taxpayer for sale or lease to others: The costs may be consistently treated as current expenses and deducted in full. The costs may be consistently treated as capital expenses that are amortized ratably over 60 months from the date of completion of the software development. The costs may be consistently treated as capital expenses and amortized ratably over 36 months from the date the software is placed in service. Under this method, the cost may also be eligible for a bonus first-year depreciation allowance." ERPs merit their own chapter.