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Submitted URL: https://engagetax.wolterskluwer.com/e/339101/-and-experimental-expenditures/42j9bp/435691636?h=_ErZ2jC-z-J9vWcXYW4Df0I2UUkwM1ZvdtjW1...
Effective URL: https://answerconnect.cch.com/federal/arp12ab2fdc287ce91000903490b11c18c90201/irc/current/amortization-of-research-and-experim...
Submission: On January 30 via manual from IN — Scanned from DE
Effective URL: https://answerconnect.cch.com/federal/arp12ab2fdc287ce91000903490b11c18c90201/irc/current/amortization-of-research-and-experim...
Submission: On January 30 via manual from IN — Scanned from DE
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1. Home
2. Code Sections
3. Income Taxes
4. Computation of Taxable Income
174
* §174Amortization of Research and Experimental Expenditures
* §174(a)In General
* §174(b)Specified Research or Experimental Expenditures
* §174(c)Special Rules
* §174(d)Treatment upon Disposition, Retirement, or Abandonment
AMORTIZATION OF RESEARCH AND EXPERIMENTAL EXPENDITURES
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Internal Revenue Code §174
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§174, AMORTIZATION OF RESEARCH AND EXPERIMENTAL EXPENDITURES
Code Sec. 174, below, as amended by P.L. 115-97, applies to amounts paid or
incurred in tax years beginning after December 31, 2021. The version of Code
Sec. 174 that is applicable on or before December 31, 2021, is available here.
174(a)In General
In the case of a taxpayer's specified research or experimental expenditures for
any taxable year—
174(a)(1)
Except as provided in paragraph (2), no deduction shall be allowed for such
expenditures, and
174(a)(2)
The taxpayer shall—
174(a)(2)(A)
Charge such expenditures to capital account, and
174(a)(2)(B)
Be allowed an amortization deduction of such expenditures ratably over the
5-year period (15-year period in the case of any specified research or
experimental expenditures which are attributable to foreign research (within the
meaning of section 41(d)(4)(F))) beginning with the midpoint of the taxable year
in which such expenditures are paid or incurred.
174(b)Specified Research or Experimental Expenditures
For purposes of this section, the term "specified research or experimental
expenditures" means, with respect to any taxable year, research or experimental
expenditures which are paid or incurred by the taxpayer during such taxable year
in connection with the taxpayer's trade or business.
174(C)SPECIAL RULES
174(c)(1)Land and Other Property
This section shall not apply to any expenditure for the acquisition or
improvement of land, or for the acquisition or improvement of property to be
used in connection with the research or experimentation and of a character which
is subject to the allowance under section 167 (relating to allowance for
depreciation, etc.) or section 611 (relating to allowance for depletion); but
for purposes of this section allowances under section 167, and allowances under
section 611, shall be considered as expenditures.
174(c)(2)Exploration Expenditures
This section shall not apply to any expenditure paid or incurred for the purpose
of ascertaining the existence, location, extent, or quality of any deposit of
ore or other mineral (including oil and gas).
174(c)(3)Software Development
For purposes of this section, any amount paid or incurred in connection with the
development of any software shall be treated as a research or experimental
expenditure.
174(d)Treatment upon Disposition, Retirement, or Abandonment
If any property with respect to which specified research or experimental
expenditures are paid or incurred is disposed, retired, or abandoned during the
period during which such expenditures are allowed as an amortization deduction
under this section, no deduction shall be allowed with respect to such
expenditures on account of such disposition, retirement, or abandonment and such
amortization deduction shall continue with respect to such expenditures.
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Research Expenditures
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Recommended Topics
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* Business Expenses: Research and Experimental Expenses
* Depreciating Computer-Related Activities: Website Development, Software,
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Research Expenditures
* State Research and Development Tax Incentives
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