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April 4, 2026The ATA Journal of Legal Tax Research0 citations

How Financial Reporting Can Inform Tax Policy on the Treatment of Research and Experimentation Expenditures: A Discussion and Recommendations

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MAMollie T. AdamsEBEllen E. Best

Key Points

  • The aim is to examine how financial reporting influences tax policy on research expenditures under recent tax law changes.
  • Analysis of revisions to I.R.C. § 174 under TCJA and OBBBA.
  • Historical examination of tax treatment for research and experimentation expenditures.
  • Review of congressional intent regarding R&E and parallel R&D discussions in financial standards.
  • The TCJA's capitalization and amortization policy may disincentivize R&D investment.
  • Congress addressed some issues in the OBBBA by restoring expensing for domestic R&E starting in 2025, but maintained capitalization for foreign research.
  • Significant uncertainty exists regarding the success of R&E projects, affecting tax treatment.

Abstract

ABSTRACT This paper analyzes the revisions to Internal Revenue Code (I.R.C.) § 174 under the 2017 Tax Cuts and Jobs Act (TCJA) and the 2025 One Big Beautiful Bill Act (OBBBA). To better understand these revisions, we analyze the historical tax treatment of research and experimentation (R H20; H25.

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Cite This Study

Adams et al. (2026) studied this question.

synapsesocial.com/papers/69d0af83659487ece0fa56eehttps://doi.org/10.2308/jltr-2025-006
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