I am a sole proprietor who got a grant from the dept of education to develop physics education software for my own business which develops educational products. I developed the software with a partner and paid myself out of the grant for doing so and paid my partner also. The entire grant is taxable as income for me. I can deduct the development costs contributed by my partner, but what about the money I paid myself for developing the software. Shouldn't I be able to deduct using section 174 the cost of the software development even though I did part of it myself. Thanks,
Dan
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