Software Development Cost Analysis
Andersen Tax software development cost analysis (SDCA) studies can generate significant tax benefits by identifying the accelerated tax deductions related to software development. Although the majority of these expenditures are typically capitalized for book purposes, the same project expenditures can potentially be eligible as a current-period deduction for tax purposes in the year in which the cost is incurred. Some of these software development initiatives include, but are not limited to: enterprise resource planning implementations; business-to-business costs; e-commerce costs; and other large scale software development projects.
Combining the experience of Andersen Tax's engineering, tax and accounting professionals with in-house client personnel, can optimize the tax advantaged treatment of software development expenditures. This may result in accelerated deductions, accelerated amortization for purchased software and/or software license arrangements, and potential research tax credits (RTCs) for innovative business-process design and software development.
As part of our overall deliverable, Andersen Tax provides IRS examination-ready binders, which include a summary of the project and related costs, a summary of recommendations on treatment of these costs, a detailed technical report supporting the tax positions and the necessary supporting documentation. Andersen Tax can provide full IRS examination support to help sustain current deductions, applicable tax credits, other tax incentives and beneficial accounting methods.
Andersen Tax can also perform and/or review FASB ASC 740 (accounting for income taxes) measurement studies related to accelerated deductions and research tax credit claims performed by in-house tax departments or outside tax consultants.
Some additional areas of our expertise include:
Research Tax Credits
As part of an SDCA study, Andersen Tax can assist in identifying and maximizing available RTCs for certain new or improved e-business transformation initiatives in the core infrastructure, business process and software development areas.
Accelerated Amortization of Tangible and Intangible Assets
Based on current guidance and project-specific facts, the opportunity may exist to accelerate the depreciation/amortization of the asset. Andersen Tax can assist in the evaluation of all related asset purchases and help to ensure the most favorable amortization schedule based on the tax defined “placed in service” date of the asset.