This law has a specific provision (and the IRS issued even more guidance confirming it) defining that all expenses related to software development are covered by section 174 and count as R&D. This includes labor costs for not just the developers themselves, but also anyone managing or supervising them, as well as any related benefits or costs of materials and supplies.

> Your product is software, so that could be viewed as COGS

the production of the software could be either the copying of the bits, rather than the writing of the code.

For example, in the case of the novelist, is the cost of sale of a book the cost of printing and distribution? the writing of the book is not a COGS cost.