No RESEARCH AND DEVELOPMENT TAX CREDIT FOR COMMERCIAL SOFTWARE DEVELOPERS: TAX AND ACCOUNTING SOFTWARE CORP. v. UNITED STATES.

Software developers attempting to claim a tax credit for research and development expenditures will face great difficulties due to a decision by the U.S. Court of Appeals for the Tenth Circuit. In Tax and Accounting Software Corp. v. United States, the court offered new guidelines for applying the discovery and process of experimentation requirements of the section 41 research and development tax credit. The court held that the plain meaning of the discovery test is that the taxpayer must show that he discovered new information and that information must be separate from the product that is actually developed.