IRS Clarifies Audit Protection in Modified R&D Guidance (1)

The IRS modified its initial guidance on accounting for research and development expenditures on Thursday.

The agency released Rev. Proc 2023-8 on Dec. 12 outlining how companies should implement the new accounting method that requires companies to amortize their R&D costs over five years.

Rev. Proc. 2023-11 supersedes the previous guidance and clarifies that a taxpayer will not receive audit protection for expenditures paid or incurred if a change in the accounting method is made the year immediately after Section 174 becomes effective.

• The previous and current revenue procedures detail how companies should note their accounting method ...