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CPA Voice: Considering the impact of Section 174

Written on Aug 24, 2023

IRC §174 addresses the treatment of expenses incurred in research and experimentation activities (“R&E”) or what many of us describe as research and development 

“The Tax Cuts and Jobs Act of 2017 (“TCJA”) modified §174,” writes Michael Bowman & Jonathan Foreman in the July/August issue of CPA Voice. “The rules now require costs that meet the definition of R&E under §174 to be accounted for under the rules of §174.  Additionally, all costs incurred in connection with software development, regardless of complexity, use, or intent, must be treated as §174 expenses.” 

Critically, the option to deduct such amounts was eliminated, meaning that all costs that meet the definition of R&E under §174 AND all software development expenses MUST now be capitalized. 

Read the entire article available online now.  

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