Tax Update: New R&D Tax Credit Rules

This presentation discussed the change in tax treatment of research and experimental (R&E) expenses as the result of the new tax regulations. There are significant impacts on how taxpayers claim and defend R&D credits. Prior to 2022, taxpayers were able to deduct or capitalize and amortize domestic or foreign R&E expenditures. The updated Section 174 guidelines changed that.

• A brief history of IRC Section 174 and the definition of R&E expenses
• The previous tax treatment related to Section 174 as well as changes resulting from the TCJA
• Limitations on availability and use of the credit
• The treatment of expenses for companies “carrying on” a trade or business versus “in connection with” a trade or business