Tax professionals Ellen McElroy and Michael Resnick of Eversheds Sutherland provide guidance on reviewing the treatment of research and development (R&D) expenditures for businesses. They highlight the uncertainty surrounding bonus depreciation, amortization of R&D expenditures, and the limitation on business interest deductions, which are all scheduled to sunset in 2025. The IRS and Treasury Department have issued procedural guidance that allows taxpayers to make automatic accounting method changes to comply with Section 174 and new substantive guidance for R&D expenditures. Businesses can determine which R&D expenses qualify under Section 174 and make accounting method changes accordingly. The reduction in bonus depreciation has led to concerns over capital investment timing, but there are options available to enhance depreciation. The article emphasizes the importance of utilizing procedural tools to clarify and improve a company’s tax position during this uncertain period.
