Yes I assume the definition of "software development" is going to be stretched as far as possible by most companies this year.

Does customer support fall under a different category? That takes up a lot of time too.

Yes absolutely. I put forth a very simplified example to illustrate the point, but I assume any competent CPA (of which I am not so this is not actual advice) is going to tell you to try and separate out as much as possible that you can reasonably claim isn't "actual software development".

I'm more just frustrated at the need to do any of it, as the underlying principle is so anti-small-business. Why are we making anyone in the software field jump through all these extra hoops now just to keep their company viable?

Because big corporations can be easily controlled by a hostile government while small businesses (absent legislation and other covert means like this) are not as easy to control. Simple as.

Agree w/ GP that it's dumb. And you may well be right, it does feel malicious.