![]() Read on below to learn more about changes to the tax treatment of R&E expenditures for tax years 2022 and beyond if Congress fails to act. ![]() Perkins & Co is closely following Congress’ deliberations for the possible extension of IRC Sec. 174 is wrapped up with other extender provisions such as the expanded child tax credit, which some members of Congress have commented on the pairing as being a “non-starter.” And while bipartisan support still exists in both chambers and the business community urges Congress to act, the extension of IRC Sec. ![]() However, Congress is racing towards a December 16 th deadline to finalize new funding levels for fiscal 2023, and omnibus spending bills are a frequent vehicle used for tax extenders. 174, legislation, including the House version of the Build Back Better Act and the Inflation Reduction Act of 2022, both failed to extend this change past December 31, 2021. The Tax Cuts and Jobs Act (TCJA) of 2017 amended Internal Revenue Code (IRC) Section 174 to require U.S.-based and non-US-based research and experimental (R&E) expenditures to be capitalized and amortized over a period of five or 15 years, respectively, for amounts paid in tax years starting after December 31, 2021.ĭespite widespread belief amongst the tax community and bipartisan support to delay the change to IRC Sec. Since 1954, taxpayers have been able to either immediately deduct R&E expenditures in the year paid or incurred or elect to capitalize and amortize over a period of at least 60 months. Tax treatment of research and experimentation (R&E) expenses and software development costs remain significantly changed for 2022 and beyond… for now.
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