SECTION 174 CHANGES: The Tax Deal moves forward at fast pace in Congress
The U.S. R&D market’s full attention is directed toward Congress due to the bipartisan tax deal that promises to turn upside down the treatment of domestic Research and Experimental (R&E) expenses under Section 174. Currently, all domestic R&E expenses from January 1, 2022, are required to be capitalized and amortized over a 5-year period, as…
SECTIONS 174 CHANGES: How this new bipartisan deal could change the U.S. R&D landscape
The U.S. R&D market has been in a frenzy since the announcement of the bipartisan deal – The Tax Relief for American Families and Workers Act of 2024 – on January 16, 2024. Although it contains a robust pack of legal changes in a wide range of areas, the deal is proposing to solve –…
TCJA and a tax deal: what could this mean for R&D?
Since 2022, under a provision in the 2017 tax law, businesses have been required to amortize their R&D costs over a five-year period, contradictorily to the same-year expensing that occurred over several decades. The requirement of R&D expenses to be amortized is an unusual tax treatment from both historical and international perspectives, according to the…
Biopharma in the U.S. innovation ecosystem: why is the sector so important?
The United States is characterized by a complex ecosystem of universities, venture-backed start-ups, and larger biopharmaceutical companies, as well as a range of policies including strong intellectual property (IP) protection, financing government of basic biomedical research and a drug pricing system that allows pharmaceutical companies to invest in R&D. Together, all these factors make the…
Research and Development Expensing: Why It is Important
Through the years, Research and Development (R&D) has always played an important role in the US economy and its growth, creating millions of jobs, and developing innovative technologies, allowing the country to stay ahead of competing nations. Investments in R&D are central for long-term technological change and innovation, and the private sector has long led…
New Requirements for R&D Tax Credit in the United States: What You Need to Know
On September 15, 2023, the IRS released a preview of proposed changes to Form 6765, inviting input from stakeholders on these revisions before the official release of the updated draft. These modifications are slated for implementation in fiscal year 2024, with taxpayers having until October 31, 2023, to submit their feedback to the IRS. The…
IRS releases new guidance on amortization of Specified Research or Experimental Expenditures under § 174
Recently, the Internal Revenue Service (IRS) released Notice 2023-63 which has provided much needed insight as to the direction the IRS is leaning in terms of § 174 expenses. The treatment of specified research or experimentation (SRE) expenditures have changed for expenditures paid or incurred after December 31, 2021. Starting in 2022, SRE expenditures are now required to…
How can the Machinery and Equipment Industry get tax credits with its investments in R&D?
What is R&D tax Credit? The R&D Tax Credit is a government-sponsored tax incentive available to companies that conduct research and development activities in US based manufacturing companies. Why is the R&D credit useful for my company’s cash flow? The R&D tax credit increases cash flow, rewards companies that hire employees that focus on technical/engineering…
2022 R&D Tax Credit Guidance/Takeaway – IRC Sec 174 vs Sec 41
R&D Tax Credit The R&D tax credit is still one of the most significant tax incentives available today. The R&D credit increases cash flow, rewards companies for hiring technical employees, reduces NOLs (if applicable), it can be carried forward, and prior years credits will significantly reduce taxable income. It provides an incentive for companies to…
The Advantages of R&D for Small Businesses
Small businesses that are considering conducting research and development activities should carefully examine the potential benefits of R&D tax credits. These benefits can include reducing income taxes, claiming valuable deductions and carrying forward any unused credit amounts to future years. Moreover, by taking full advantage of available R&D tax credits, small businesses can realize significant…