Section 174 Overview

As part of the Tax Cuts and Jobs Act, taxpayers will no longer have the option of expensing Section 174 costs and will be require to amortize them for tax years beginning after December 31, 2021. These costs include not only expenses included in the R&D Credit, but other costs related to research and development as well. While there is bipartisan support to delay or eliminate this requirement, it is important to understand the current legislation in order to properly plan for tax year 2022 and going forward.



UPDATE – 4/04/2024

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R&D Tax Credits Update

David Seibel, senior manager in our R&D practice, returns to McGuire on the Wire to give an update on R&D Tax Credits, including Section 174. He overviews where we stand now that we've gotten through the 2022 filing season and move into tax planning for 2023 and beyond.


Distinguishing Section 174 from Section 41

In this webinar, David Seibel and TJ Sponsel walk through distinguishing Section 174 from Section 41. David and TJ overview the current landscape, explain the technical differences, discuss how CPAs should be approaching this with clients, and how to construct 174 calculations. The webinar concludes by overviewing the firm’s current and future outlook for the R&D tax credit.

In The News

Is the R&D Credit 280C election still relevant?

There has been much discussion recently regarding the Tax Cuts and Jobs Act Section 174 amortization requirement that took effect for tax years beginning after Dec. 31, 2021.

Because of this provision, taxpayers are now required to amortize their research expenditures over five years for domestic costs and 15 years for foreign research costs. However, a conforming amendment in Section 280C has the potential to provide a much-needed boost to those companies that also claim the Section 41 R&D Credit.


How McGuire Sponsel Can Help

Proactive and strategic planning is critical in guiding clients through this change. If you or your clients need assistance or perspective on how to proceed, our R&D Tax Credit team at McGuire Sponsel has the technical expertise in both IRC 174 and IRC 41, and can assist in helping your clients navigate through this law change.

All Recent Section 174 Resources