SECTION 1. OVERVIEW

This notice clarifies and modifies Notice 2023-63, 2023-39 I.R.B. 919, which announced that the Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) intend to issue proposed regulations (forthcoming proposed regulations) addressing (1) the capitalization and amortization of specified research or experimental (SRE) expenditures under § 174 of the Internal Revenue Code (Code), ¹ as amended by Public Law 115-97, 131 Stat. 2054 (Dec. 22, 2017), commonly referred to as the Tax Cuts and Jobs Act (TCJA), (2) the treatment of SRE expenditures under § 460, and (3) the application of § 482 to cost sharing arrangements involving SRE expenditures, and provided interim guidance that taxpayers may rely on until the forthcoming proposed regulations are published in the Federal Register . Specifically, this notice clarifies and modifies Notice 2023-63 regarding (1) the treatment of costs paid or incurred by a research provider for research performed under contract, (2) the requirement that a taxpayer that chooses to rely on any of the rules described in Notice 2023-63 must rely on all the rules described in sections 3 through 9 of the notice, and (3) the obsoletion of section 5 of Rev. Proc. 2000-50, 2000-2 C.B. 601. The guidance in this notice does not apply for purposes of determining whether an expenditure paid or incurred for taxable years beginning before January 1, 2022, is a research or experimental

expenditure under § 174 as in effect for taxable years beginning before January 1, 2022 (former § 174). Unless otherwise provided, the definitions in Notice 202363 apply for purposes of this notice.