The IRS should issue guidance regarding the capitalization and amortization of domestic research and experimental (R&E) expenditures through modifications to Rev. Proc. 2025-28 or other published guidance, the AICPA recommended in a recent letter to Treasury.
The AICPA recommended that the IRS issue guidance specifying that the capitalization and amortization election under Sec. 174A(c) is an election applied on a project-by-project basis for domestic R&E paid or incurred in the tax year of the election and subsequent tax years, consistent with Sec. 174 and Regs. Sec. 1.174-4 prior to 2017’s Tax Cuts and Jobs Act.
The AICPA also recommended that the IRS give taxpayers the option to treat the election under Sec. 174A(c) as a yearly election applied to domestic R&E paid or incurred in the tax year of election only. See more recommendations.