The Process of Experimentation Test for Software Development

To qualify as research and development per the Internal Revenue Code (§41), the taxpayer must show that the activities pass the four-part test. Today we are focusing specifically on the process of experimentation test (§41(d)(1)(C)). The term process of experimentation means a process that involves the evaluation of more than one alternative designed to achieve a result where the means of achieving that result is uncertain at the outset. Software development projects typically follow a certain development methodology such as: Generally speaking, these methodologies are processes of experimentation and include a cycle of requirements gathering and specification, design, coding, testing, performance tuning, and product release. Oftentimes certain sub-processes during development are repeated or iterated as the software is built to … Read More