Proposed Rules on Research & Development Tax Credit for Internal Software

On Friday, January 16, 2015, the Department of Treasury released proposed regulations for the R&D Tax Credit regarding the inclusion of computer software developed primarily for internal use. The proposed regulations define internal use software as “software developed for use in general and administrative functions that support the taxpayers trade or business.”

Software is not considered internal use if it is developed to be:

  • Commercially Sold
  • Leased
  • Licensed
  • Marketed to third parties
  • Enables a taxpayer to interact with third parties
  • Allow third parties to initiate functions
  • Review data on the taxpayer’s system

The proposed regulations will allow otherwise excluded internal use software development to be considered qualified research.

For further information regarding the Research & Development Tax Credit, call 800-236-6519.

Click here for a free benefit analysis of your research and development activities.


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