Tax News Update    Email this document    Print this document  

Today, the IRS and Treasury Department released Notice 2024-12 (Notice), clarifying and modifying Notice 2023-63 (which addresses rules that the IRS is considering for inclusion in proposed regulations under IRC Section 174, as amended by the Tax Cuts and Jobs Act) and Rev. Proc. 2024-09, modifying Rev. Proc. 2023-24 (the procedure identifying automatic changes in methods of accounting).

Clarification and modification of Notice 2023-63

Notice 2024-12 clarifies rules in Section 6 of Notice 2023-63 relating to research performed under a contract. The Notice also modifies the reliance rules in Notice 2023-63 by removing the requirement that taxpayers must rely on all of the rules in Sections 3 through 9 of Notice 2023-63. Finally, the Notice clarifies that Section 5 of Rev. Proc. 2000-50 (costs of developing computer software) is obsoleted for amounts paid or incurred in tax years beginning after December 31, 2021.

Modification to Rev. Proc. 2023-24

Rev. Proc. 2024-09 modifies Sections 7 and 19 of Rev. Proc. 2023-24 to provide procedures under IRC Section 446 and Treas. Reg. Section 1.446-1(e) to obtain automatic consent of the Commissioner to change methods of accounting for expenditures paid or incurred in tax years beginning after December 31, 2021, to rely on interim guidance under IRC Section 174 and 460 provided in Notice 2023-63. This revenue procedure also clarifies Section 9 of Rev. Proc. 2023-24 to provide that Section 5 of Rev. Proc. 2000-50 is obsoleted for costs of developing computer software paid or incurred in any tax year beginning after December 31, 2021, and continues to apply to costs of developing computer software paid or incurred in any tax year beginning on or before December 31, 2021.

A Tax Alert is forthcoming.

Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor