I see now that Section 6.04 explicitly states that if a provider retains any right to use the developed software, they are not allowed to deduct their expenses:
> "However, even if the research provider does not bear financial risk under the terms of the contract with the research recipient, if the research provider has a right to use any resulting SRE product ... costs paid or incurred by the research provider that are incident to the SRE activities performed by the research provider under the contract are SRE expenditures of the research provider for which no deduction is allowed ..."
Thus, the rule as written would make it such that contractors who write Windows drivers could deduct their expenses (as they would have no rights to Windows), but contractors who write Linux drivers may not (as they would have some rights to Linux).
In effect, the tax rules would explicitly double-tax open source software development, due to its over-broad test of whether you could have any right to the code base you've written, irrespective of whether the code you wrote actually has any practical residual value to the author.
> "However, even if the research provider does not bear financial risk under the terms of the contract with the research recipient, if the research provider has a right to use any resulting SRE product ... costs paid or incurred by the research provider that are incident to the SRE activities performed by the research provider under the contract are SRE expenditures of the research provider for which no deduction is allowed ..."
Thus, the rule as written would make it such that contractors who write Windows drivers could deduct their expenses (as they would have no rights to Windows), but contractors who write Linux drivers may not (as they would have some rights to Linux).
In effect, the tax rules would explicitly double-tax open source software development, due to its over-broad test of whether you could have any right to the code base you've written, irrespective of whether the code you wrote actually has any practical residual value to the author.