The IRS and Treasury have released updated guidance on accounting method changes for research and development (R&D) expenditures after a revenue-raising provision of the Tax Cuts and Jobs Act (TCJA) of 2017 took effect.
The new guidance (Revenue Procedure 2023-11) supersedes Revenue Procedure 2023-8, which the IRS issued in late December of 2022.
The TCJA provision requires amortization of R&D expenses by companies over a five-year period, rather than allowing them to immediately deduct them.
In general, the TCJA changes apply for specified R&D expenditures paid or incurred in taxable years beginning after Dec. 31, 2021.