Peter Blessing, IRS Associate Chief Counsel (International), said Treasury and the IRS expect to issue amendments to the IRC Section 482 cost-sharing regulations "in the very near term."¹ Speaking on July 29, 2026, at the National Association for Business Economics' annual transfer pricing symposium in Washington D.C., Blessing said the amendments would reflect the changes made by the One Big Beautiful Bill Act (OBBBA) to the treatment of research and experimental (R&E) expenditures under IRC Sections 174 and 174A.

Under the IRC Section 482 regulations, cost-sharing arrangements allow related parties to share the costs and risks of developing intangible property based on their reasonably anticipated benefits. The regulations determine each participant's cost share by requiring taxpayers to identify and allocate intangible development costs.

The OBBBA added IRC Section 174A, which, beginning in 2025, generally restores the ability to immediately deduct domestic R&E expenditures. Because the cost-sharing regulations rely on IRC Section 174 concepts in defining intangible development costs, questions have arisen regarding how the new statutory framework should apply in the cost-sharing context.

According to the article, tax practitioners have requested additional guidance on several issues arising under the revised R&E regulations, including how to identify incidental costs, definitions for software development and methods for treating costs related to contract research arrangements.

The regulations are expected to address the interaction between IRC Section 174, IRC Section 174A, and the cost-sharing rules under Treas. Reg. Section 1.482-7, according to the article.

Blessing did not provide a specific timeline for the release of the regulations or say what would be included in the amendments.

Implications

The forthcoming amendments could affect how taxpayers identify and allocate intangible development costs under existing cost-sharing arrangements, particularly for domestic R&E, software development, incidental, and contract research costs. Taxpayers should monitor the guidance and document their current treatment of these costs pending clarification.