¹³See Witner and Krumwiede, Purchasing, Leasing and Developing Software (Part I), 34 The Tax Adviser 404 (July 2003), for a discussion of modification versus development expenditures in the context of enterprise resource planning software installation.

¹⁴See, e.g., Rev. Proc. 2000-50, IRB 2000-52, 601.

¹⁵Oliver B. Kilroy, TC Memo 1980-489; see also Eugene Magee, TC Memo 1973-271.

¹⁶Internal-use software requirements do not apply to the development of a combined software and hardware product to be used by the taxpayer in providing services to its customers; eligibility is determined by examining it as a single product; see Prop. Regs. Sec. 1.41-4(c)(6)(iii).

¹⁷The basic research credit in Sec. 41(a)(2) does not apply in the circumstances discussed and is beyond the scope of this article.