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Posted by Seth Breidbart on February 10, 2007, 6:05 am
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> I am a sole proprietor who got a grant from the dept of
> education to develop physics education software for my own
> business which develops educational products. I developed
> the software with a partner and paid myself out of the grant
> for doing so and paid my partner also. The entire grant is
> taxable as income for me. I can deduct the development costs
> contributed by my partner, but what about the money I paid
> myself for developing the software.
>
> Shouldn't I be able to deduct using section 174 the cost of
> the software development even though I did part of it
> myself.
If the business deducts the amount it paid you, then you owe
taxes on the amount you were paid. Since the business is a
sole proprietorship, I see no benefit.
Seth
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