R&D Deduction Rules Need Clarification, Accounting Group Says

The Treasury and IRS should issue regulations to clarify research and development requirements that were changed under the 2017 tax law, the American Institute of CPAs’ Tax Executive Committee said in comments released Tuesday.

AICPA said Treasury and IRS should issue regulations on Section 174 (a) expenditures to include direct costs, “including employee compensation, contract labor, and materials, and, at the taxpayer’s election, allocable indirect and overhead costs,” as well as explain in detail which costs are “‘incident to’ the development or improvement of a product.”

The 2017 law changed when and how businesses could deduct their R&D ...