Section 174 Update – R&D Expenditure Capitalization

September 14, 2023

The IRS released an advance version of Notice 2023-63 providing interim guidance intended to clarify the application of section 174, as amended by the “Tax Cuts and Jobs Act” (TCJA).

The notice includes guidance addressing:

  • Capitalization and amortization of specified research or experimental (SRE) expenditures under section 174, as amended
  • Treatment of SRE expenditures under section 460
  • Application of section 482 to cost-sharing arrangements involving SRE expenditures

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