Rev. Rul. 58-74 is obsoleted.

PROSPECTIVE APPLICATION

Pursuant to § 7805(b), Rev. Rul. 58-74 is obsoleted as of July 31, 2023. The obsoletion of Rev. Rul. 58-74 does not affect the characterization of the costs of obtaining a patent in § 1.174-2(a)(1). Furthermore, the obsoletion of Rev. Rul. 58-74 does not affect the specific rules for changing a method of accounting under former § 174 and the regulations under former § 174, including the requirement that such change be implemented on a cut-off basis. See former § 174(a)(3), § 1.174-3(b)(2), and § 1.174-4(a)(5).

A taxpayer may file a claim for refund, amended return, or AAR, as applicable, in reliance on Rev. Rul. 58-74 if the taxpayer is (1) claiming a deduction for additional research or experimental expenditures to which the expense method under former § 174(a) is applicable for the taxable year or years in which they were improperly deferred or capitalized, (2) otherwise using the expense method for such tax

able year or years, and (3) timely filing the claim for refund, amended return, or AAR not later than July 31, 2023. The eligibility to file a claim for refund, an amended return, or an AAR in reliance on Rev. Rul. 58-74 does not imply that the IRS will grant such claim for refund, amended return, or AAR. The IRS will continue to challenge the applicability of Rev. Rul. 58-74 to a particular claim for refund, amended return, or AAR when appropriate. For example, the IRS may challenge the applicability of Rev. Rul. 58-74 when the taxpayer’s facts in the amended return, refund claim, or AAR are distinguishable from Rev. Rul. 58-74, including where the taxpayer failed to adopt the expense method under former § 174(a).

DRAFTING INFORMATION

The principal author of this revenue ruling is Bruce Chang of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this revenue ruling, contact Mr. Chang at (202) 317-4870 (not a toll-free number).

May 1, 2023 802 Bulletin No. 2023–18