Software Development

Tax Point Advisors Helps Software Development Company Claim $566,000 in Federal and Arizona Tax Credits

Company Description: 

The software developer for this example consisted of two companies that were part of a controlled group due to common ownership. The two organizations create and develop software and websites for independent retailers selling appliances, consumer electronics, furniture, mattresses, decorative plumbing, hardware, and lawn and garden products. The software created by this client and all the custom designed websites support thousands of retailers on a daily basis. The web-based application allows retailers to “present” their company to the public via the internet and properly manage traffic and queries on product inventory. Additionally, other web-based applications allow retailers to properly price and manage their pricing scheme in real time to trend to changes in the market.

Specific Qualifying Activity:

The company is committed to the advancement of innovative research and focuses their product development on the introduction of new and innovative electronic pricing tools in their preferred markets. Specific qualifying activities include:

  • Development of new software packages that interface directly with client webpages and the internet
  • Creating software that optimizes pricing schemes based on real-time data
  • Analyzed, modeled and evaluated multiple concepts and solutions for performance and functionality
  • Coding and application development
  • Alpha and Beta testing for prototype development and release updates
  • Database design
  • Development of case studies for functionality and performance evaluation
  • Merging and integration of legacy systems with new platforms or releases
  • Back-end development of new software applications and platforms such ecommerce engines utilizing source code developed in a programming language such as C++ or Java, which ties in to a web-based front
  • Core infrastructure development
  • Usability testing
  • Cloud side services development

Companies that create software are often excellent candidates for the research and development tax credit. In order to remain competitive in the market place, they are constantly developing and implementing new releases to stay relevant and functional in the ever-changing technology sector.

Ultimate Benefit to Company:

Tax Point Advisors conducted a tax credit study from 2011 to 2014. The company has revenues of $5 million. Tax Point Advisors conducted an R&D tax credit study and was able to find $566,000 in federal and state tax credits for the owner of this software company.


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