SaaS, software, and technology companies have R&D credit and Section 174 opportunities that most CPAs don't understand.
These are the opportunities we find in nearly every technology engagement — money left on the table by traditional CPAs.
Not claiming R&D tax credits on software development, cloud infrastructure, and engineering work
Section 174 amortization requirements increasing taxable income despite real losses
Founder stock and option exercises creating unexpected tax liabilities
Not structuring for qualified small business stock (QSBS) exclusion from the start
Overpaying on SaaS revenue recognition without proper tax timing strategies
These are the strategies we evaluate and deploy for every technology client — tailored to your specific numbers.
R&D tax credit — software development, infrastructure engineering, ML/AI work, and testing all qualify
QSBS (Section 1202) — exclude up to $10M or 10x basis in capital gains on qualified C-Corp stock held 5+ years
Section 174 planning — strategic timing of R&D expenditure capitalization and amortization
State R&D credits — many states offer additional credits on top of federal (CA, NY, MA, TX payroll credit)
Entity optimization for funding: C-Corp for VC/QSBS, S-Corp for bootstrapped profitability
How we turned a $217K tax bill into over $1M in cumulative savings.
Yes. Writing code, developing new features, improving performance, building cloud infrastructure, and testing all qualify if there's technological uncertainty involved. This includes SaaS product development, internal tools, API integrations, and data engineering. We typically find $75K–$300K in annual R&D credits for tech companies.
Qualified Small Business Stock (Section 1202) lets you exclude up to $10M in capital gains when selling C-Corp stock held for 5+ years. Requirements include: C-Corp with under $50M in gross assets at issuance, active business (not investment or professional services), and stock acquired at original issuance. This must be planned from day one — you can't retrofit it.
Since 2022, R&D expenditures must be capitalized and amortized over 5 years (domestic) or 15 years (foreign) under Section 174. This means your engineering costs increase taxable income even when you're not profitable. Strategic planning around the timing and classification of these expenses is critical.
If you're raising VC or planning for QSBS, C-Corp is typically required. If you're bootstrapped and profitable, S-Corp avoids double taxation and allows payroll tax optimization. The decision depends on your funding strategy, exit timeline, and current profitability.
Yes, but only 65% of contractor expenses qualify (vs. 100% for W-2 employees). This is still a significant credit — a company spending $500K on contract developers can claim credits on $325K of that spend.
Book a free review and we'll identify the technology-specific opportunities hiding in your numbers.
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