Research & Development Expenses Must Be Capitalized Starting in 2022

Research & Development Expenses Must Be Capitalized Starting in 2022

Historically, taxpayers have been allowed to expense costs they incur related to research and development (R&D) within their business. However, the Tax Cuts and Jobs Act of 2017 included a tax provision that becomes effective for tax years beginning after January 1, 2022 that requires taxpayers to capitalize those cost and amortize them over either 5 years (for cost incurred domestically) or 15 years (for costs incurred outside of the U.S.). This means that instead of the cost being deductible in the year they are incurred the deduction will now have to be spread over either a 5 or 15 year period.

There has been some discussion about legislation possibly being passed to delay the effective date of this provision but as the law stands right now this requirement will be effective for calendar year 2022 tax returns.

Reach out to your trusted BRC tax advisor if you have any questions.


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The information contained in this article is for informative purposes only and should not be relied on when making any business, legal, or other decisions. This information may be updated without notice and/or may not contain the most current information that is available related to this topic. Please consult with your advisor to determine how this information applies to your specific facts and circumstances.