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Section 174A, as added by the One, Big, Beautiful Bill Act (Pub. L. 119-21), allows a deduction for any domestic research or experimental expenditure which are paid or incurred in taxable years beginning after December 31, 2024. Section 174, as amended by the One, Big, Beautiful Bill Act, provides that section 174 applies only to foreign research or experimental expenditures and that such expenditures continue to be amortized ratably over a 15-year period beginning with the midpoint of the taxable year in which such expenditures are paid or incurred. Any amount paid or incurred in connection with the development of any software continues to be treated as a research or experimental expenditure. 

Section 174, as amended by the Tax Cuts and Jobs Act (Pub. L. 115-97) required taxpayers to amortize specified research or experimental expenditures ratably over a 5-year period (or a 15-year period in the case of specified research and experimental expenditures that were attributable to foreign research), beginning with the midpoint of the taxable year in which the specified research or experimental expenditures were paid or incurred. Further, any amount paid or incurred in connection with the development of any software is treated as a research or experimental expenditure.

The Treasury Department and the IRS have issued various pieces of sub-regulatory guidance under section 174/174A and related methods of accounting. The public has submitted more than 600 written comments. However, several hundred of those written comments addressed the impact of the statutory changes enacted by the Tax Cuts and Jobs Act that were resolved by the One, Big, Beautiful Bill Act. Representatives from the Treasury Department and the IRS have met with stakeholders on aspects of the anticipated proposed regulations.