Case: Gross Receipts Derived from Provision of Access to Software Qualified as DPGR under Third-Party Comparable Exception (T.C. Memo) (§199)

Petitioner is entitled to some I.R.C. §199 deductions allocable to two product softwares because certain capabilities of the softwares meet an exception to the general rule that provision of access to a software is a service, but Petitioner’s allocation of gross receipts between software and services was incorrect, the U.S. Tax Court held. Petitioner, a major financial technology, information, and news business, sold the two softwares at issue to customers and claimed §199 deductions for tax years 2008–2010, claiming that substantial portions of the subscription fees and related expenses were allocable to domestically produced software. The IRS disallowed the deductions, ...