What’s New

Domestic research and experimental expenditures. P.L. 119-21 adds new section 174A to the Internal Revenue Code. Section 174A(a) allows corporations to deduct amounts paid or incurred for domestic research and experimental expenditures in tax years beginning after December 31, 2024. Alternatively, under section 174A(c), a corporation may elect to charge such expenditures to a capital account and amortize such expenditures ratably over a period of not less than 60 months, beginning with the month in which the corporation first realizes benefits from such expenditures. In addition, section 70302(f) of P.L. 119-21 provides corporations with various transition options that may be applied to recover unamortized amounts paid or incurred in tax years beginning after December 31, 2021, and before January 1, 2025, that were capitalized and amortized for such taxable years. See Rev. Proc. 2025-28 for information regarding the transition options contained in section 70302(f) of P.L. 119-21, as well as the procedures to follow to begin applying either section 174A(a) or (c) for the corporation’s first tax year beginning after December 31, 2024. See Revenue Procedure 2025-28, available at IRS.gov/irb/2025-38_IRB#REV-PROC-2025-28 for information regarding both elections. See Line 37 , later, for more information.