In a Spring 2017 article written for the Civic Research Institute publication, Journal of Taxation and Regulation of Financial Institutions, Tax Credits Group President Michael Krajcer provides readers with an overview on how the Oct. 4, 2016 final Internal-Use Software (IUS) regulations revised the 2015 proposed rules, making significant favorable changes and providing much greater clarity.

The recent article provides detail on the following:

  • Why Internal-Use Software (IUS) has historically been subject to more stringent eligibility requirements.
  • What the ‘High Threshold of Innovation’ test is and why this eligibility requirement was so challenging for taxpayers developing IUS software to meet.
  • How final IUS regulations now provide taxpayers with clarity as to the definition of the three requirements that make up the high-threshold–of-innovation test, and the process-of-experimentation test that all soft­ware development is subject to.
  • How dual-function software will be addressed moving forward; (Both IUS and non-IUS software being developed as part of an integrated system.)
  • Why financial institutions developing customer-facing software are sure to benefit from these final regulations.

The full article is available for download at:

About Michael Krajcer:

Michael Krajcer is President of Tax Credits Group. He has specialized in the R&D Tax Credit since he started with the IRS in 1986 and was the Cleveland large case technical specialist on the issue.  Subsequent to his government career, he continued as an expert in the credit area in Big-4 accounting, industry, and with his own national practice. Mike has worked with hundreds of companies throughout the United States and has resolved dozens of IRS and state audits of credit claims.




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