The Tax Cuts and Jobs Act (TCJA) signed in to law on December 22, 2017 had a provision in it that is going to have a negative impact to companies that are used to deducting these expenses. As a means to pay for the Act, effective for all years beginning after December 31, 2021 all of these costs are required to be capitalized and amortized over 5 years for domestic research and 15 years for foreign.
However, the Biden administration and the House have so far included a repeal of the December 31, 2021 effective date in each version of the Build Back Better Act (BBBA). Currently, the BBBA has not passed and is not law. Hopefully, if and when something does become law this repeal will survive. Until then we have to plan accordingly.
Gary Weinman, C.P.A., is a Tax Partner at Katz, Nannis + Solomon, P.C. If you have any questions or would like to speak with one of our tax professionals, please contact our office at 781-453-8700.