Capitalize Costs of Software Development

Under current law, a taxpayer may deduct the costs of development of computer software as soon as the costs are paid or accrued. The immediate deduction of investment costs that have continuing value means that tax does not reduce the pretax return from the project. Existing law, moreover, gives a 20 percent credit for an increase in software development costs and a deduction of 9 percent of income for production…
Andrews & Kurth Centennial Professor of Law, University of Texas at Austin - School of Law, USA
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