Section 174 research expenses: What’s changing and what are my next steps?

The year 2022 is rapidly coming into focus and with it looms a major change to the tax treatment of research expenses. More specifically, a provision from the Tax Cuts and Jobs Act is slated to take effect by modifying Section 174 and requiring research expenses to be capitalized and amortized over multiple years instead of being deducted in the year incurred. It is possible that Congress could take action to change this result, but now’s the time to consider the steps that will be necessary if Congress fails to act.

What does this potential change mean for you? Our tax experts will help lay the groundwork of what Section 174 is, discuss the current rules, and explain the changes on the horizon. They’ll go through the indirect impacts of capitalization, and spend time discussing the ins and outs of what you should be tracking and how. They’ll also discuss some common misconceptions about Section 174 and the R&D tax credit. Finally, they’ll wrap up with actionable steps you can take to start preparing for this change.

Learning objectives:

• Define Section 174 and what the changes coming in 2022 will mean for the tax treatment of research expenses
• Develop best practices for tracking for Section 174 expenses
• Define what decisions you can make now to prepare