It looks like the CFR (at least here) hasn't been updated to match the corresponding USC: https://www.law.cornell.edu/uscode/text/26/174
See c(3). Any software development is unambiguously R&D.
See c(3). Any software development is unambiguously R&D.
Note limiting phrase.
Section 174 later: "For purposes of this section, the term “specified research or experimental expenditures” means, with respect to any taxable year, research or experimental expenditures which are paid or incurred by the taxpayer during such taxable year in connection with the taxpayer’s trade or business."
Note the "in connection with the taxpayer's trade or business" and look up the definition of that phrasing versus "carrying on" business and compare to Section 162. (e.g., Snow v. Commissioner of Internal Revenue, 416 U.S. 500 (1974), Cantor v. Commissioner of Internal Revenue, 998 F.2d 1514 (1993), Scoggins v. Commissioner of Internal Revenue, 46 F.3d 950 (1995))
Section 174 later: "For purposes of this section, any amount paid or incurred in connection with the development of any software shall be treated as a research or experimental expenditure."
Note the limiting phrase.
Ultimately we need guidance from the Service but the above are (possibly aggressive) readings some CPAs are taking.
Stranger things have happened but I don't see how someone can defensibly argue that software dev doesn't have to be ammortized.
"For purposes of this section" to me means you don't have to justify software development as R&E if you define that software development work as R&E.
Being pedantic, but it's R&E not R&D.
[1] https://news.bloombergtax.com/tax-insights-and-commentary/ch...
It is ambiguous even if you disagree with Bloomberg.
"For purposes of this section, any amount paid or incurred in connection with the development of any software shall be treated as a research or experimental expenditure."