Turning Complex Tax Rules into Savings
The rules governing IRC Sec. 174 research and experimental (“R&E”) expenditures have recently shifted under the One Big Beautiful Bill Act (“OBBBA”) legislation, reopening the ability for certain businesses to fully expense domestic R&E costs rather than being forced into multi-year amortization. This creates important strategic planning opportunities.
At PSTS, we help businesses assess whether full expensing or amortization provides the most beneficial outcome given their tax posture, cash flow needs, and interaction with other provisions such as the R&D Tax Credit (IRC Sec. 41) and IRC Sec. 280C limitations. While domestic R&E may be eligible for immediate expensing under OBBBA, foreign R&E costs remain subject to 15-year amortization, which can significantly impact long-term tax planning.
Our team provides practical guidance on:
- Identifying and classifying domestic vs. foreign R&E activities
- Evaluating when expensing vs. amortization best aligns with your overall tax strategy
- Preparing accounting method change filings and election statements as required
- Coordinating Section 174 treatment with your R&D tax credit position to maximize benefits
With IRS compliance and cash flow optimization in mind, PSTS ensures your business not only remains compliant with IRC Sec. 174 requirements but also chooses the approach that creates the greatest long-term tax savings