Do you know how §174 R&D Deduction Changes will affect you?
You could potentially pay more in taxes this year. Immediate action is critical.
For tax purposes, companies are now required to capitalize and amortize investments in research and development (R&D) over 5 years for domestic activities or 15 for foreign activities.
These changes will have unavoidable implications on cash flow and taxable positions.
Businesses that have historically benefited from the favorable tax treatment of fully deducting R&D and software development expenditures “as incurred” could be facing a much larger tax burden.
Act now. Don’t get caught off-guard by a suddenly larger tax burden. Contact Dave Hanson.
Companies that have been consistently investing in R&D can expect to pay more in taxes, and companies previously in losses could be at risk of becoming taxable.
Are you at risk?
Companies investing in R&D or software development can expect to pay more in taxes. Businesses with R&D or software development activities that occur outside the U.S. face the greatest risk, as costs related to foreign activities cannot qualify for the U.S. R&D credit – the main tool to partially offset these expenses.
How Aprio can help?
Immediate action is critical to determine to what extent §174 changes will impact you. Aprio’s R&D Tax Credit Services team can help you analyze costs, evaluate R&D tax credit calculation eligibility and model the direct and indirect impact of the new capitalization requirements on your company.
Further resources
Additional resources are available to help you better understand this critical issue
