IRS Modifies Previous R&D Amortization Guidance in New Notice

The IRS Friday issued additional guidance for the tax treatment of research or experimental expenditures.

Notice 2024-12 clarifies that costs paid or incurred by a research provider for research performed under contract aren’t specified research or experimental or SRE expenditures if they meet certain criteria.

Historically, companies could deduct all costs associated with the research and experimentation activities under Section 174 in the year they occur. The 2017 tax law introduced new rules and they are now required to capitalize and amortize SRE expenditures over five years.

• This guidance addresses Notice 2023-63 that was released in September and ...