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 – 7/30/2024

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Resources

  • Podcast
  • Webinar
  • In The News
Podcast

Strengthening Client R&D Tax Credit Claims: Key Areas Often Overlooked

On Let’s Talk Tax, host ⁠TJ Sponsel⁠ and guest Audrey Asfoor discuss the intricacies of ⁠R&D tax credit⁠ documentation. This episode delves into the importance of proper documentation, the challenges faced by various industries, and the benefits of on-site fieldwork for clients.

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Webinar

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.

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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.

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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.

Recent Resources

  • podcasts
    R&D Tax Credit Services
    September 26, 2024

    174 Is Not Going Anywhere

    by TJ Sponsel & David Seibel, EA

    In this episode, host ⁠TJ Sponsel⁠ welcomes back guest ⁠David Seibel⁠, principal of McGuire Sponsel’s ⁠R&D Tax Credit Services⁠ practice...

  • case studies
    R&D Tax Credit Services
    September 26, 2024

    Industrial Manufacturing Companies

    by Kyle Riddle

    McGuire Sponsel worked with three industrial manufacturing companies to perform an R&D Tax Credit study collectively to maximize benefit for...

  • podcasts
    R&D Tax Credit Services
    August 8, 2024

    IRC 41 & 174 Uncertainty: What Every CPA Should Know

    by TJ Sponsel & Garrett Duffy

    In this episode, host ⁠TJ Sponsel⁠ and first-time guest ⁠Garrett Duffy⁠ delve into the technical distinctions between ⁠Sections 174 and 41⁠...

  • blog
    R&D Tax Credit Services
    July 30, 2024

    Is H.R. 7024 a Political Football?

    by TJ Sponsel

    After months of delays in the U.S. Senate, Senate Majority Leader Chuck Schumer (D-NY) plans to take H.R. 7024 to...