OBBB signed: Reinstates immediate expensing for U.S.-based R&D

It also classifies software development as R&D which together with immediate expensing for R&D undoes the Section 174 changes as far as I understand.

“For purposes of this section, any amount paid or incurred in connection with the development of any software shall be treated as a research or experimental expenditure“

Page 303 of bill here https://www.congress.gov/119/bills/hr1/BILLS-119hr1eas.pdf

Original article about Section 174 tax code causing layoffs

https://news.ycombinator.com/item?id=44180533

Post from @dang with more info about Section 174

https://news.ycombinator.com/item?id=44226145

That's nuts

Page 301

> there shall allowed as a deduction any domestic research and experimental expenditures which are paid or incurred by the taxpayer in the current taxable year

AFAIK, there was no domestic vs. foreign R&D distinction in section 174 before.

>It also classifies software development as R&D

The TCJA (passed in 2017) already did that (effective 2022). So it sounds like this new bill is keeping that, but changing the deduction rules back to what they were before 2022.

See this previous discussion of the TCJA:

> all "software development" is now an R&E expense.

https://news.ycombinator.com/item?id=34627712

(AIUI, "R&D" (research and development) and "R&E" (research and experimentation) are synonyms.)

There was a domestic vs foreign distinction in the TCJA, passed in 2017, which took effect in 2022:

> 174 to require taxpayers to amortize specified R&E expenditures ratably over a five-year period for domestic expenditures and a 15-year period for specified R&E expenditures attributed to foreign research

https://www.journalofaccountancy.com/issues/2022/nov/amortiz...