HOUSTON, TX. JANUARY 26, 2015 – In what is being hailed as a major win for the software industry, on January 16th the U.S.
Department of Treasury issued new regulations regarding the development of software and its eligibility for the Research and
Development (R&D) tax credit. The new regulations both clarify and narrow the definition of “Internal Use Software” (IUS), or
software that is not sold, leased or licensed to a third party. As IUS must meet a higher standard to qualify for the R&D tax
credit than traditional software development, the narrowing of software defined as IUS will effectively broaden the
application of the credit, allowing for more businesses to claim the incentive.

“The Treasury Department and the IRS went to great lengths to bring some clear lines on IUS,” said Dean Zerbe, former Senior
Counsel to the U.S. Senate Finance Committee and alliantgroup National Managing Director. “By narrowing the definition of
what constitutes IUS, the Treasury regulations reflect the realities of software development in the economy and will also
ensure that the research credit will be available to benefit a greater number of small businesses.”

Under the new Treasury regulations, software is now not considered IUS if the software is “sold, leased, licensed or otherwise
marketed to third parties.” Specifically, the rules state that software that enables a business to interact with a third party (such
as a customer or client) is appropriate to exclude from the definition of IUS. The regulations clarify that IUS only refers to
software that is developed for general and administrative functions that facilitate or support a taxpayer’s trade or business.
These functions are limited to financial management, HR management and support services.

“The new rules are a giant step forward when it comes to developing software that allows you to interact with your customers,”
said Zerbe. “For many years, determining whether the software you had developed was internal or external was difficult at
best. With these new regulations, both Treasury and the IRS have come to recognize that IUS requirements should not be so
restrictive as to make the standard impossible to meet.”

“We anticipate that the new regulations will have a positive economic impact on companies from a diverse range of industries,
not just software developers,” said alliantgroup CEO, Dhaval Jadav. “Manufacturers, sellers on the web and financial
institutions, among others, are all potential beneficiaries of these changes. This is great news for American businesses.”

About alliantgroup- alliantgroup’s mission is one of education and awareness – we exist to help industry organizations, U.S.
businesses and the CPA firms that advise them, take full advantage of all federal and state tax credits, incentives and
deductions available to them – our government has legislated these powerful incentive programs to help businesses grow and
successfully compete both in the U.S. and abroad. alliantgroup’s headquarters is in Houston, Texas, with offices across the
country including New York, Boston, Chicago, Orange County, Sacramento, Orlando, Indianapolis and our Washington, D.C.
National Office.