Stay up-to-date on the latest firm, tax, and regulatory updates by joining our newsletter!
The 2017 Tax Cuts and Jobs Act (TCJA) resulted in a rule change for accounting for Research & Experimentation (R & E) expenditures effective for amounts paid or incurred in tax years beginning after December 31, 2021. The new law eliminates the option to expense or capitalize R & E or software development costs. Beginning in 2022, businesses are required to capitalize these expenditures and amortize over 5 years (15 years for foreign based R & E). This capitalization requirement applies whether or not the business claims the R & E credit related to its R & E expenditures.
Although we had hoped that Congress, which had the bipartisan support in 2021, would reverse this capitalization rule, we now feel that it may not happen during this mid-term election year.
Other issues relating to this rule change:
Please reach out to your BGM Professional if you have questions, or you may complete and submit the Contact Us form.
Please SUBSCRIBE to our newsletter and you’ll receive practical, actionable updates on a regular basis.