On March 16, a bipartisan bill was introduced to Congress to roll back the provision of the Tax Cuts and Jobs Act (TCJA) that requires capitalization and amortization of Research & Experimentation (R&E) expenses under IRC Section 174. The bill, named the American Innovation and Jobs Act, if passed, would effectively repeal the TCJA’s changes to Section 174. This would allow taxpayers to deduct the expenses in the year incurred.
Our FD teams wants to express that this effort has had bipartisan support for several years, and several prior bills that included the repeal have not been passed. Because the bill is in its infancy and the legislative process takes time, expectations of repeal should be tempered, and we recommend that compliance teams continue to treat the Section 174 issue with diligence. The current law, which requires capitalization and amortization, is still in effect and will have to be addressed on tax returns, quarterly payments and tax provisions until (and if) any future repeal passes Congress and is signed into law by the President.
View the reintroduced bill from Sens. Maggie Hassan (D-NH) and Todd Young (R-Ind).
For more information, please contact:
Tommy Zavieh, Partner & National Practice Leader, Credits & Incentives | tommy.zavieh@frazierdeeter.com
Sheila R. Anderson, Partner, Credits & Incentives | sheila.anderson@frazierdeeter.com
Allen Tobin, Principal, Credits & Incentives | allen.tobin@frazierdeeter.com