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Open Source Tax Credit?
An Onymous Coward writes: "While looking for a few loop holes in the tax code, I ran across this interesting IRS Regulation.
I was wondering, if using this if Open Source programming is tax deductable? Linked from here under Credit for Increasing Research Activities." It's an interesting-sounding twist in the tax maze, but probably better to get your certified tax accountant to sign off on it first. Note that the second link there goes to (allegedly) "Plain Language Regulations," but they remind me of the book Unbridled Power intead. Does anyone else have any good hindsight on how techies can / should approach their tax forms?
> You always hear (friend of a friend) stories
> about people who paint pictures, value them at
> $1000, then donate them to the local Red Cross
> or YMCA.
That doesn't gain you anything. You'd have to claim $1k worth of income from creating that painting, and then claim $1k worth of charitable deductions. End result is the same.
> My impression is that's a good way to get
> yourself audited, but if you can sell other
> paintings for $1000, it is legal.
Nope. It doesn't work that way.
If the Red Cross sells the painting at an auction for $1000, then the painting is worth $1000, and the artist should get a receipt for that amount.
You can donate cars and get a receipt for the blue-book value of the car, even if it doesn't run.
These things would come into the tax paper as an itemized deduction, which comes off of your regular income and doesn't require you to have a separate business.
If you're a Linux consultant and donate hours to a non-profit and get a receipt for the time you spent there, and the time is in line with the other customers you have, why can't you deduct that time?
Now, in all these cases, there are services or items you're donating. Writing software is a different subject. Go talk to your tax lawyer/accountant.
Get an experienced Tax ATTORNEY. not a loser accountant. in order to get something past the IRS you need to demonstrate that what you're doing is "probably legal" (i don't remember the exact legal phrase) which means you need a tax attorney ( a good one) to convince them!
You can earn money writing code or technical articles in same time it would take to argue this deduction with a tax laywer or (God forbid) an
IRS auditor. How would you rather spend your time?
There's cute things you can do- like file an ammendment like another poster suggested. Another thing you can do is file an automatic extention, which extends your time to file another two months- to the 15th of June.
I am not merely a "consumer" or a "taxpayer". I am a Citizen of the State of Texas
It's not good getting a huge check, no. Problem is, for most, they don't have much in the way of options to tell them how much to withhold. Unless you're self-employed, you're at the mercy of the witholding rules, which aren't finegrained enough to prevent overpaying or underpaying for some.
Worse, they'll penalize you if you severely underpay those taxes.
I am not merely a "consumer" or a "taxpayer". I am a Citizen of the State of Texas
I don't believe you get charged interest and penalties, *if you pay before the deadline.* And, it does take some discipline to ensure that you've got the bucks at the end of the year to pay the taxes.
You should be able to find liquid money-market accounts that pay decent interest, and reasonably liquidable split stocks that pay very good interest with little risk.
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Don't like it? Respond with words, not karma.
Heck, and if you can figure a way to end up owing the revenue folk each year, *DO IT.*
Otherwise, you're basically floating them an interest-free loan. And that's just senseless.
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Don't like it? Respond with words, not karma.
If you are getting a big refund check, then you are probably paying too much in taxes. By not hanging on to that money yourself, you've lost the time value it had. You could have put it in something low risk like money market and still have come out ahead.
Sounds like the person doing your taxes might be getting you screwed.
This sig is false.
on how techies can / should approach their tax forms?
Isnt April 15th a little late to be asking this???
Paying taxes to buy civilization is like paying a hooker to buy love.
If you OWE money on your taxes there isn't a single good reason not to earn interest on it in your interest-bearing-account-of-choice up until the last possible day.
If you get a refund due, absolutely, file as soon as you can, but if you owe unto Caesar, then there's no reason to give it up any sooner than the last possible date.
D
By your own analogy with the painting, I *could* deduct the *cost* of developing the open source software if I dontated to FSF, for instance. If I bought hardware solely for that purpose, for instance, or if I purchased a commercial compiler, development tools, or whatever, I could deduct that.
Correct?
My journal has hot
Simple. They're due then. I owe Uncle Sam a little this year, so he's not getting any free interest on it by paying it before it's due. If I'd had a refund coming, I would have filed by Feb. 7th or so. My taxes and forms have been ready since the 10th of February. It's just smart management of my assets (although, if I had done it MORE intelligently, I'd have zeroed the amount owed. But you can't always plan your paid overtime, or your consulting income.....)
You need to be more specific. According to the document you linked to:
SUMMARY: This document contains proposed regulations under section 41 of the Internal Revenue Code of 1986 describing when computer software which is developed by (or for the benefit of) a taxpayer primarily for the taxpayer's internal use can qualify for the credit for increasing research activities.
Just because it's open source doesn't mean you developed it. Open source usually means you're using someone else's work as well. Furthermore, I'd doubt you'd be able to pass the test of saying it's for your internal use - especially if you work collaboratively on it, and upload your source code to external trees frequently.
As I read it, this is for companies/individuals who develop their own software, so that they can take advantage of the R&D credits. The government smiles on those who do their own R&D.
So, going by what you asked, if you're simply using Linux and expecting a tax credit, that's ridiculous, because it's not developed primarily by you, for your internal use. (Unless your name is Linux Torvalds or Alan Cox.) If you're rolling your own code that you use for your own internal use (logically speaking, that could even be batch programming) then you might be able to use this.
What's your damage, Heather?
The GPL and the BSD-license, the two most common licenses, does not restrict you from using the software commercially. What could be tax-deductable anyway, is developing software and giving it out under an opensource-license.
First of all, you cannot deduct the value of your time. This is one aspect of the tax code that really sucks, but it was put in place to stop egregious claims by rich folk who used to write off vacations. GWB should find a way to loosen up on this.
If you can come up with a defensible fair market value for an original piece of software you created, I don't see why you couldn't claim that. Companies already take the value of software licenses donated, so assigning full rights to a tax deductable charity should in principle work too (caveat -- there may be precedent against this which overrides any kind of reason so check with your accountant). The problem is that licenses have easily determinable market values, whereas a new work could be pig-in-a-poke. Supposing Digital Creations wished to assign rights to Zope to FSF. What is the value of that? It overlaps with some valuable commercial products such as Cold Fusion, but it isn't really comparable.
It may be that this would work best if you have a closed source product which has a track record of sales. You can point to past sales as evidence for putting a market value on the product. The problem is that abandonware is usually not fabulously valuable; this would only work if a company is open sourcing a valuable product for strategic reasons.
In any case, if your work consists of changes to already open sourced works, you probably can't claim anything, because you have no ownership stake in the original product or any derivative works.
Finally, be aware that anything you claim as a gift must be claimed by the recipient as income. While they do not pay income tax, it will create income on their income statement, and in subsequent years it will likely need to be depreciated, producing paper expenses. The reason this is important is that many kinds of charities (probably not the FSF) are dependent upon the generosity of old money farts who like to back sure winners, with their investments or their philanthropy. I've been in the position of considering rejeting software gifts because it would make us look financially unstable.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
IRS taxes income,
Actually, the IRC taxes things besides income. It has this weird idea that it can tax you on the value of stock options you exercised, even if you didn't sell the stock at that value. There was no income (you never had your hands on the cash), but you owe taxes anyway.
-russ
Don't piss off The Angry Economist
Last session there was a bill, the Artists' Contribution to American Heritage Act, that would have allowed the picture painting scenario you describe, see Sen. Leahy's letter. It seems likely that it would have applied to software but its not clear how it would be applied to Open Source software because it is unclear how to appraise Open Source software. See the thread on the Union for the Public Domain's mailing list.
In the discussion, according to RMS companies (not individuals) can already claim a credit for donations of proprietary software to FSF (which would presumably "free" it) or other such organization, but that he was not aware of any such situation where that had occured. It would surprise me if no companies would take advantage of this as companies like IBM are donating copyrights on code to FSF. I believe that patches to GCC must have copyright assigned to FSF.
The bill didn't pass, it will probably be reintroduced this session.
Of course, any discussion of taxes and free software would be incomplete w/o mentioning the Hacker Tax Credit.
IANALNAA, Neither Lawyer Nor An Accountant
:-)
Does anyone else have any good hindsight on how techies can / should approach their tax forms?
I've tried a number of approaches.
Blunt instruments, sharp instruments, shredders with safety cover removed. But the most satisfying approach to american tax forms is the good old fashioned flame thrower. Watching it burn can make you feel as if you have some control in the face of the behemoth.
Note, this year I had to file tax returns in five different countries. I'd prefer your cash to your pity at this point. (do I need smileys in this post?
the AC
Hemos is like...sci-fi fans;he thinks technology is cool, but he hasn't bothered to understand the science it's based on
Rarely will working on your own car land you in jail if you do it wrong.
Rarely will asking your friends for advice about personal problems put you in serious debt six years later when you're audited or arrested.
And rarely is somebody dumb enough to be unable to tell the difference between the opinion of a semi-anonymous armchair expert and a trusted paid professional. Both have their place, and both are helpful. So maybe you could stop raining on somebody else's parade via copy and paste?
You will note that this thread, for all your grumbling, contains pretty much exactly the advice a professional accountant will give you: the link the original poster dug up doesn't get you beans with the IRS, and that if you are donating your professional services you can only deduct expenses, not your hourly rate. How do I know? I asked my accountant about this a couple of weeks ago.
And even if people want to double-check with a professional, now they know the issues involved and can go ask a couple of quick questions, rather than paying $250 an hour to cover all the ground we've covered here. Thank goodness you have stepped in to save us all from this terrible fate.
Get some professional, personal, specific advice from someone who is accountable for the answers they provide.
I completely agree. This is as silly as looking online for technical information, trying to work on your own car using some sort of "book" for the consumer, or asking your friends for advice about personal problems. We have professionals to do these things for us.
Anybody who is foolish enough to ask anybody other than a professional gets what they deserve; life is too complicated to be dealt with by amateurs. Sure, other people might have "experience" that appears to be relevant, but only a trained expert can tell the difference, so don't risk using your own judgement. Some might suggest that talking about things with your pals first might help you collect your thoughts, but they're just likely to steer you wrong; after all, they're only amateur friends, not professional ones.
So in sum, if you aren't paying for it, it isn't worth getting. This poster has wisely pointed out how foolish it is, and thank goodness he is nipping this tendency in the bud. Next thing you know people will be thinking they can use software that they don't pay for, or having a girlfriend who doesn't charge them by the hour.
Hmmm... I gave my accountant about $500, and I get about $8000 back this year. I see a correlation here. Could somebody please give their lawyer all their money and let me know if they get millions?
You can always file an ammendment for past years, and get anything back that you were owed (or possibly have to pay more)
That we should establish a few non-profit organizations that act as charities that employ hackers for projects based on donations from the community. Sort of like the developer networks except that they are tax writeoffs for the donors.
;-) Let's elect Linus as our patron saint! "Ha ha, only serious, world domination now" (tm). CaTB as the bible.
I'm no tax code expert but it seems to me that you could set up a real 503C corporation, employ actual programmers full or part time and pay for it all with donations. It seems legit to me. Most charities have a staff that either directly does things or tells volunteers what to do. They get paid and the people donating their salaries get a tax deduction for so doing.
We could even set it up as a church
Dealing with tax collectors is like dealing with vampires - if you invite them into your house, it's hard to make them go away without them sucking your blood first.
The one place you get special bennies on your taxes is if you buy capital assets (typically stock) and donate the stock rather than selling it and donating the cash. I think you get to deduct the market value of the stock rather than your basis, but you manage to get around some of the differences in tax treatment between capital gains and ordinary income. So if you gave the FSF your RedHat shares last year when they were worth big bucks, that was a win ; doing so today is less useful
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
[stock rant on the subject]
The abbreviation IANAL normally stands for the caveat, "I am not a lawyer," which often serves as a disclaimer in online discussions where lay people are exchanging legal advice or their opinions on matters of law.
I contend, IANAL better means "Incompetent Advice Necessarily A Liability."
Why do people ask legal advice on weblogs where a real lawyer is essential? If you're concerned about a licensing issue or personal freedoms, especially with large corporate or government interests at stake, why would you even consider taking the opinions of anonymous amateur pundits on a for-profit advocacy weblog?
Get some professional, personal, specific advice from someone who is accountable for the answers they provide. As much as some people don't like the lawyer culture, it is clear that a reputable lawyer wants to stay that way, and will be very careful to consider your situation thoroughly.
[end of stock rant on the subject]
[
You always hear (friend of a friend) stories about people who paint pictures, value them at $1000, then donate them to the local Red Cross or YMCA.
My impression is that's a good way to get yourself audited, but if you can sell other paintings for $1000, it is legal.
I've had companies charge $150 an hour for my time, so why can't I donate code to the FSF or other charitable group, and get myself a nice fat charitable donation?
Bryan
More importantly, it seemed to say it was for software developed primarily for a taxpayer's own use, and that it had to accomplish some task for which there is not readily available or purchasable software to do the job. One or both of these would seem to rule out most open source projects.
Some of the one-off stuff I put together (often in python) would seem more likely to meet the terms of this credit than most open source projects. But they probably don't accomplish significant enough tasks, and they're usually just for my own hobbies rather than any business purpose, so they probably wouldn't qualify either.
I think that its too bad that economics have been so politically polarized. Sure Rep/Dem have agendas, but it seems like we're locked in a battle between taxing the rich and creating loopholes for them to escape from, instead of having some actual dialog on what taxes should be like for various income brackets.
If tax law were simplified it would be a lot easier to see where the money was really coming from, and it would end the existence of loopholes that exist only for those rich enough to pay CPAs to exploit them.
Ultimately this should be fairer--it will eliminate the gap between ostensible and actual taxation.
Kind of ironic, really:
onymous: bearing a name
That is, the opposite of anonymous.
Does anyone else have any good hindsight on how techies can / should approach their tax forms?
With a 10 foot pole?
And if the artist did get a receipt for that amount, then the IRS will ask why he didn't claim that income on his/her 1040. If the artist did claim the amount of the 1040, then the result is at least as much tax as s/he can write off.
I knwo about the car donation thing. You have to pay for the car. You have to show that it is worth that much.
You can't deduct the time because you didn't earn anything. If you do deduct some amount, you had better have a receipt for the amount you are claiming. And if you are claiming it as a donation, you had better claim it as income on your 1040. You can't donate something you didn't earn.
-no broken link
This is based on the rules for business. The iffy thing is that in this case it's not an expense of the business but an expense of the donation. My understanding of the tax system is that you can write it off (since you lost the money to make the donation, effectively donating that amount), but charities work a little differently than business expenses. You'd have to get something from the charity that says they "received" the donation of the depreciation. Once you go there, things get very tricky, because without donating the whole machine and letting it depreciate on their accounting, how do you account for the machine on two different books. The IRS isn't really set up to allow you to donate 1/6th of a machine, and then let that 1/6th be the first to depreciate, while the rest is entact. Typically shared equity (like in a partnership) depreciates evenly across all the partners. So if you did donate 1/6th of a machine, and it depreciates 1/6th, your portion would have depreciated 1/6th (worth, now 25/36ths of its orginal value), and the FSF's portion is worth 5/36ths of the value. This leaves them with a stake in the machine.
This I would talk to a tax attorney about, and you would have to get a buy in from the charitable organization in question, since it is ultiately their receipt of donation that will allow you to write it off.
-no broken link
But the Red Cross isn't going to give you a receipt for $1000. And even if they did, it's like a previous poster stated, the IRS will then ask you to claim the $1000 on you 1040.
-no broken link
Once it is appraised, you will be taxed on the increase in value on the appraisal. This is similar to the government taxing you on an increase in the value of your home (and how you can write off a decrease in the value of your home). You can think of the art as an investment, and the appraisal establishing your investments gain.
-no broken link
Yes, bu tthen you would have to claim the $20000 on your income, if the value of the painting increased while it was in your posession. It's capital gains.
-no broken link
Someone posted an urban legend about a person making a painting, valuing it at $1000 and donating it to the Red Cross, claiming a tax writeoff. While this could happen, the artist would not be writing off $1000, s/he would be writing off the cost of the materials to make the painting. The IRS runs itself bookkeeping on reciepts. What reciepts are there in this picture? There is no $1000 receipt (unless the painting materials cost $1000). If you honestly think you can look at an IRS agent and claim $1000 without a receipt backing it, you deserve the fraud charges they will lay on you.
One other thing that should be pointed out is that even though the painter writes of the cost of the materials, that doesn't mean he gets the cost of the materials back from the Government. It's not like the government is paying him to make paintings for the Red Cross. It just means that his taxable income will be reduced. I paid about 29% on my taxes (no state tax in Florida), which means I would get 29% of the material cost back.
Bringing this back to the task at hand: the tax credits are based on the cost of developing the software. This makes sense when you look at other things the IRS allows businesses partially deduct. If a business cannot find shrinkwrap software to fulfill it needs, and it spends money to develop software, then part of the money it spends can be deducted. If someone pays you to develop open source code for their internal use, then they can deduct some of that cost.
You cannot just say "I bill at 150/hr, and worked 1000 hours on this open source project, so I'll deduct 150,000 dollars from my income". Think of it this way, you didn't loose the 150,000, you just didn't gain it. Since you didn't gain it, it wasn't taxed anyway. Since it wasn't taxed, it isn't subject to a deduction/writeoff/credit.
This all stems around the two immutable facts: the IRS taxes income, and you cannot get more money back from the IRS than you put in*.
*: actually this isn't totally true. There are certain rebates that you may qualify for that will have them sending you money, even if (especially if) you made no income that year. But they are always a fixed amount, and very little (on the order of hundreds).
-no broken link
As far as I can see, this is a tax credit for R&D, including all type of programming.
I can't see any statement anywhere which indicates that "Open Source" programming would be treated any differently from "Closed Source" programming.
Tarsnap: Online backups for the truly paranoid
Guys, if you want the R&D Tax Credit, you have to develop something new. Seeing what gets announced each day, the bulk of what goes on in "open source" land is the redevelopment of commercial products.
That isn't R&D anyway. The R&D credit is to encourage businesses to advance what the US can produce (I believe it stems from the economic crisis of the 70s, but it might be a bit earlier), not to write software designed to take away the revenue stream of a company in the economy.
I truly doubt that most stuff that comes out open source would qualify anyway. However, this makes sense, the truly novel and interesting stuff is often sold under a commercial license, even by people that mostly deal in Open Source.
Alex
Likewise, if someone gives you a house, even though you're not getting any money, you better believe the IRS'll tax you on the value of it.
The only "intuitive" interface is the nipple. After that, it's all learned.
"The question of whether a computer can think is no more interesting than that of whether a submarine can swim" -EWD
You have to have related taxable income to use the R&D tax credit. And you have to have related expenditures. But if you do, this is worth looking into for open-source developers.
"Does anyone else have any good hindsight on how techies can / should approach their tax forms?"
Go to HR Block, give them $50, let them do your taxes. Last year I got $40 back, this year I got $100 back. Not bad.
Peace,
Amit
ICQ 77863057
[o]_O
If you're developing a new kind of neural net, that is computer research.
If you are making a web browser theme(able), that is development.
So, unless you're making some kind of scientific breakthrough, I doubt it would count, all licensing issues put aside. Reoptimizing ls and more for new processors hardly strikes me as a "research effort."
Eh...
They have a 3-part test in addition to the basic description. It basically says that the software development has to be innovative, meaning remarkably faster or economically advantageous (they're thinking TCO here), it has to involve a substantial risk or dedication of resources, and it has to serve a purpose that cannot be found in commercially available products. I would imagine that if the commercially available products have such horrendously high licensing fees that it is actually cheaper to develop an in-house solution, you satisfy this, but that would have to be a rather small portion of the market.
WARNING: there is a trojan on your
hmm don't you think you should have asked this ohhh about 3 months ago? hehe
> > > > >
Par. 3. Section 1.41-4 is revised to read as follows:
1.41-4 Qualified research for taxable years beginning after December 31, 1985.
(a) through (d) [Reserved].
(e) Internal-use computer software--
(1) General rule. Research with respect to computer software that is developed by (or for the benefit of) the taxpayer primarily for the taxpayer's internal use is eligible for the research credit only if the software satisfies the requirements of paragraph (e)(2) of this section. Generally, research with respect to computer software is not eligible for the research credit where software is used internally, for example, in general and administrative functions (such as payroll, bookkeeping, or personnel management) or in providing noncomputer services (such as accounting, consulting, or banking services).
(2) Requirements. The requirements of this paragraph (e)(2) are--
(i) The software satisfies the requirements of section 41(d)(1);
(ii) The software is not otherwise excluded under section 41(d)(4) (other than section 41(d)(4)(E)); and
(iii) One of the following conditions is met--
(A)The taxpayer uses the software in an activity that constitutes qualified research (other than the development of the internal-use software itself);
(B) The taxpayer uses the software in a production process that meets the requirements of section 41(d)(1); or
(C) The software satisfies the special rule of paragraph (e)(5) of this section.
(3)Computer software and hardware developed as a single product. This paragraph (e) does not apply to the development costs of a new or improved package of computer software and hardware developed together by the taxpayer as a single product, of which the software is an integral part, that is used directly by the taxpayer in providing technological services in its trade or business to customers. In these cases, eligibility for the research credit is to be determined by examining the combined hardware-software product as a single product.
(4)Primarily for internal use. All relevant facts and circumstances are to be considered in determining if computer software is developed primarily for the taxpayer's internal use. If computer software is developed primarily for the taxpayer's internal use, the requirements of this paragraph (e) apply even though the taxpayer intends to, or subsequently does, sell, lease, or license the computer software.
(5) Special rule. Computer software satisfies the special rule of this paragraph (e)(5) only if the taxpayer can establish that--
(i) The software is innovative (as where the software results in a reduction in cost, or improvement in speed, that is substantial and economically significant);
(ii) The software development involves significant economic risk (as where the taxpayer commits substantial resources to the development and there is a substantial uncertainty, because of technical risk, that such resources would be recovered within a reasonable period); and
(iii) The software is not commercially available for use by the taxpayer (as where the software cannot be purchased, leased, or licensed and used for the intended purpose without modifications that would satisfy the requirements of paragraphs (e)(5)(i) and (ii) of this section).
(6) Application of special rule. In determining if the special rule of paragraph (e)(5) of this section is satisfied all of the facts and circumstances are considered. The special rule allows the costs of developing internal-use software to be eligible for the research credit only if the software meets a high threshold of innovation. The facts and circumstances analysis takes into account only the results attributable to the development of the new or improved software independent of the effect of any modifications to related hardware or other software. The weight given to any fact or circumstance will depend on the particular case.
(7) Effective date. This paragraph (e) is applicable for taxable years beginning after December 31, 1985.
Check out the Vinny the Vampire comic strip
"It is a greater offense to steal men's labor, than their clothes"
As mentioned earlier, in order for you to take deductions, you must have income. For many types of income, such as hobby income, you can only take deductions to the extent of your income. No money to be made here.
Now on to the R&D Tax Credit - that is what those in the tax business call it. The idea of this credit is to get US businesses to invest in R&D. The tax law usually responds to the current trends in the economy. This credit came about when there was a lot of talk and attention about the US falling behind in technology development.
Now let's dive into this section of the code - which is section 41 if you are interest. First, the credit is not for 100% of all R&D expenses. It is actually only 20% of expenses that exceed a calculated base amount. There is a list of what expenses qualify, and they have to be actual out of pocket expenses. Not working and sitting at home working on open source projects does not qualify as an expense. The base amount is calculated by using the average annual gross receipts of the taxpayer. No receipts = base amount = no credit. Qualified Research is the next issue. Found in 41.d.1.a Qualified Research is undertakenfor the purpose of discovering information which is technical in nature AND the application of which is intended to be useful in the development of a new or impoved business component of the taxpayer. Paragraph D also has some restrictions on software credits.
As I was just reading through this section of tax code, my engineer bf walked in and said all that jibberish made no sense to him. I think him trying to read tax code is like me trying to read the Stevens book on that TCP/IP stuff.
This looks really interesting- it seems to be oddly silent on the subject of what "external" use would be- I am guessing that any available GPL'd software that had more than one application would fall under this category.
Only tricky part to watch out for - you can't get credit unless there is substantial uncertainty about recouping the profits from the research. The intent of this provision seems to be to encourage only real innovations in turbulent markets (where they need the most help), but what if they took it the other way? What I mean is, what if some establishment types said "well, if you give your software away, there ceases being any uncertainty about whether you'll make a profit, but rather a complete impossibility of recouping your costs!"
Of course I don't think that way, but lawyers are funny about interpreting the law sometimes.
Bryguy
microsoftword.mp3 - it doesn't care that they're not words...
This sounds like something you should ask an accountant, and, if you can get away with it, tell Slashdot... All that this sort of question will do is get a while lot of speculation, and an overuse of the acronym IANA(T)L...
From a brief glance, though, it doesn't seem like it would qualify. This cut applies to software produced for internal use, from the looks of it, and Open Source projects are meant to be used by the community as a whole... However, remember... IANAL...
When encryption is outlawed, ?o'AZ-,++o+i++##4AoA+-/-C++bI+/.+~
I'm not an tax professional, but in order to claim deductions, don't they usually (with some exceptions) need to offset demonstrable income ? Since I presume most people who do open-source software are not making money from that work, I would guess it would be pretty hard to claim any deductions. Of course as others have noted, people *should* consult a tax professional.
The software is not commercially available for use by the taxpayer (as where the software cannot be purchased, leased, or licensed)
Wouldn't the GPL or whatever the hell Open Source "License", just kill all those thoughts of geeks getting a tax break.
Primarily for internal use. All relevant facts and circumstances are to be considered in determining if computer software is developed primarily for the taxpayer's internal use. If computer software is developed primarily for the taxpayer's internal use, the requirements of this paragraph apply even though the taxpayer intends to, or subsequently does, sell, lease, or license the computer software.
Suggestion would be to honestly ask a CPA or so, someone is likely going to end up shafting themselves if they think that program they just wrote for SourceForge qualifies for a break.
boobs
360 degrees of Karma
We need equal opportunity! We need to level the playing field! First it was just the rich that got tax breaks, now it's the educated!?!?!? Don't you think we're going a little too far?
Apparently, you can get away with a lot these days. A tax expert described this as: "many business people treat the filing of their tax return as a 'first offer'"; if the IRS doesn't audit them, they pay a small fraction of what is due.