26 U.S.C. § 174
§ 174. Amortization of research and experimental expenditures
No plain-English explainer yet. Below is the official text. Explainers are being added section by section.
History
Changed by the 2025 tax lawPart of the code since 1954. Last changed July 4, 2025 by the One Big Beautiful Bill Act (2025).
Every change, newest first (9)
- July 4, 2025One Big Beautiful Bill Act (2025)
- December 22, 2017Tax Cuts and Jobs Act (2017)
- December 19, 2014Tax Increase Prevention Act of 2014
- December 19, 1989Omnibus Budget Reconciliation Act of 1989
- November 10, 1988Technical and Miscellaneous Revenue Act of 1988
- October 22, 1986Tax Reform Act of 1986
- September 3, 1982Tax Equity and Fiscal Responsibility Act of 1982
- October 4, 1976Tax Reform Act of 1976
- August 16, 1954Internal Revenue Code of 1954 (original text)
The law as written
Current through Public Law 119-102. Amendment notes omitted.
Structure
In the case of a taxpayer’s foreign research or experimental expenditures for any taxable year—
except as provided in paragraph (2), no deduction shall be allowed for such expenditures, and
the taxpayer shall—
charge such expenditures to capital account, and
be allowed an amortization deduction of such expenditures ratably over the 15-year period beginning with the midpoint of the taxable year in which such expenditures are paid or incurred.
For purposes of this section, the term “foreign research or experimental expenditures” means, with respect to any taxable year, research or experimental expenditures which are paid or incurred by the taxpayer during such taxable year in connection with the taxpayer’s trade or business and which are attributable to foreign research (within the meaning of section 41(d)(4)(F)).
This section shall not apply to any expenditure for the acquisition or improvement of land, or for the acquisition or improvement of property to be used in connection with the research or experimentation and of a character which is subject to the allowance under section 167 (relating to allowance for depreciation, etc.) or section 611 (relating to allowance for depletion); but for purposes of this section allowances under section 167, and allowances under section 611, shall be considered as expenditures.
This section shall not apply to any expenditure paid or incurred for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral (including oil and gas).
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.
If any property with respect to which foreign research or experimental expenditures are paid or incurred is disposed, retired, or abandoned during the period during which such expenditures are allowed as an amortization deduction under this section, no deduction or reduction to amount realized shall be allowed with respect to such expenditures on account of such disposition, retirement, or abandonment and such amortization deduction shall continue with respect to such expenditures.