December 12, 2022
BREAKING TAX NEWS | IRS issues long-awaited guidance on obtaining automatic consent to change accounting methods for specified research or experimental expenditures to comply with IRC Section 174
The IRS has issued procedures (Revenue Procedure 2023-8) under IRC Section 446 and Treas. Reg. Section 1.446-1(e), allowing taxpayers to obtain automatic consent to change the accounting method for specified research or experimental expenditures to comply with IRC Section 174, as amended by the Tax Cuts and Jobs Act. IRC Section 174(a)(2) requires the taxpayer to charge specified research or experimental expenditures to a capital account and allows the taxpayer an amortization deduction of the expenditures over five years (15 years if the specified research or experimental expenditures relate to foreign research), beginning with the midpoint of the tax year in which the taxpayer pays or incurs the expenditures. The required IRC Section 174 method applies to tax years beginning after December 31, 2021. A Tax Alert with additional details is forthcoming.
Published by NTD’s Tax Technical Knowledge Services group; Jennifer A Brittenham, legal editor