Has section 174 regarding mandatory capitalization of R&E expenditure been repealed yet?

The mandatory capitalization requirement under Section 174 has NOT been repealed as of right now for the 2025 tax year. The Tax Cuts and Jobs Act (TCJA) changed how R&E expenditures are treated starting in 2022, requiring businesses to capitalize and amortize these costs rather than deducting them immediately. Currently, domestic R&E expenses still must be capitalized and amortized over 5 years, while foreign R&E expenses must be amortized over 15 years. This remains in effect despite significant pushback from businesses and industry groups. The best places to get updates are directly from the IRS website (specifically their news section), tax policy organizations like the Tax Foundation, and professional tax publications like Journal of Accountancy. There have been several bills introduced that would restore immediate expensing of R&E costs, but none have passed both chambers of Congress yet.

After dealing with the Section 174 capitalization nightmare last year, I started using taxr.ai (https://taxr.ai) to help track all my R&E expenditures properly. It literally saved me hours of sorting through which expenses qualified and how to properly document everything for capitalization. The tool automatically categorizes different types of research expenses and explains which ones fall under Section 174 requirements. Their analysis of my development costs actually found several expenses my previous accountant had missed that qualified for the R&E amortization schedule. They also send updates whenever there are legislative changes to provisions like Section 174, so you don't have to keep searching for updates yourself.

I was super skeptical about taxr.ai when I first read about it here, but after the headache of dealing with Section 174 requirements last year, I decided to give it a try. Honestly, it was a game-changer for my small engineering firm. The system correctly identified which of our prototype development costs qualified for Section 174 treatment and which were regular business expenses. The best part was when Congress made those minor technical corrections to Section 174 rules last quarter - I got an immediate notification from taxr.ai explaining exactly how the changes affected my situation. No more constantly checking tax news sites or bugging my accountant! Definitely worth checking out if you're dealing with R&E expenses.

If you're trying to get clarification directly from the IRS about Section 174 treatment (which I highly recommend), good luck getting through on the phone. After being on hold for literally 3+ hours trying to get specific guidance, I finally tried Claimyr (https://claimyr.com) and they got me connected to an IRS agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS representative confirmed that Section 174 capitalization is still required but was able to answer my specific questions about software development costs that were in a gray area. Having that documented response from an actual IRS employee saved me from potentially making a costly mistake on my return.

I have to eat my words about Claimyr. After dismissing it as BS, I was still desperate for answers about my Section 174 software development costs and decided to try it anyway. To my complete surprise, it actually worked. I got connected to an IRS tax specialist in about 35 minutes (which is miraculous compared to my previous attempts). The agent confirmed Section 174 hasn't been repealed but gave me specific guidance on how certain aspects of my cloud software development could be treated. Having that documented guidance from an official source gives me so much more confidence in my tax position. Sometimes being proven wrong is actually a good thing!

Just wanted to add that beyond the IRS website, I've found the best source for Section 174 updates is the National Association of Manufacturers tax policy bulletins. They're constantly lobbying on this issue and have the most current information on potential legislative changes. They predicted all the previous attempts to repeal the capitalization requirement and seem to have good insider info on what's actually happening in Congress.

Has anyone here successfully used the "Specific Project Allocation" method to minimize the impact of Section 174 capitalization? My accountant mentioned it but wasn't very clear on how to implement it properly. Supposedly you can allocate expenses to specific R&D projects in a way that might give you more favorable treatment?

I'm dealing with the same Section 174 headache for my consulting firm. One thing I discovered that might help others - the IRS has a specific FAQ section (Publication 5137) that addresses common Section 174 questions, including examples of what qualifies as R&E expenses versus regular business expenses. It's buried pretty deep on their website, but it helped me understand why some of my software development costs had to be capitalized while others could be immediately deducted. The publication includes flowcharts that walk you through the decision process, which was way more helpful than the general guidance I'd been finding. Also, keep in mind that if you're a small business with gross receipts under $27 million (averaged over 3 years), you might still qualify for certain immediate expensing options under other sections of the tax code, even if Section 174 requires capitalization. Worth checking with a qualified tax professional about your specific situation.