Accounting for Section 174 continues to plague companies with no Congressional relief so far. Jamie Overberg dropped in at Colorado Senators’ offices in Washington, DC to educate legislators and their staff on the devastating impact on businesses, as well as solutions to ease the burden.

Accounting for Section 174 continues to plague companies with no Congressional relief so far. The tax treatment under §174 changed with the Tax Cuts and Jobs Act of 2017 (TCJA), affecting expenses incurred beginning with the 2022 tax year. The impact of these adjustments to §174 and determinations for some companies, particularly smaller and loss companies, has been disastrous. As of this writing, the U.S. Congress was still considering reversing or altering its post-TCJA treatment of §174 expenses.  

Jamie Overberg, partner at TaxOps Minimization, dropped in – unannounced — at the Colorado Senators’ offices in Washington D.C. to educate legislators and their staff on the devastating impact on businesses. While Senator Michael Bennet from Colorado was unavailable, his staff welcomed Jamie in and took copious notes as she outlined the issues and solutions for businesses. While Jamie was unable to meet with Senator John Hickenlooper, his staff had Jamie provide a written explanation of the importance of this issue for U.S. businesses. 

Regulatory Update 

The U.S. Treasury and IRS released a joint Notice 2023-63 to primarily announce that proposed regulations are coming to address modifications to the treatment of §174, particularly in relation to R&D expenses (see Guidance is out on §174). We will keep you apprised as this guidance evolves into final regulations.  

Contact your TaxOps Minimization Advisor with any questions. 

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