The movement to restore full expensing of R&D costs in the year the expenses are incurred, instead of amortizing them over 5 years, is gaining momentum in Congress.
A bi-partisan bill had previously been filed in the U.S. Senate to return full expensing of R&D Costs (S. 866). That effort has now been joined by a House bill (H.R. 2673) which seeks “To amend the Internal Revenue Code of 1986 to restore the deduction for research and experimental expenditures.” The House bill has 65 co-sponsors, including 28 members of the Ways and Means Committee, which is largely responsible for writing tax laws.
This is encouraging news, but there is no guarantee either of these bills will pass or be signed into law. If you are in an industry in which the timing of the deductibility of R&D expenses has impacted your operations and your bottom line, it is incumbent upon you to contact your Senators and Representative to urge them to support these bills.
If you have any questions about R&D credits or the current regulations on amortization, please contact Gray, Gray & Gray at (781) 407-0300.