Updates to Section 174 Could Change How You Claim R&D Expenses

  • Industry trends
  • 4/5/2021
Team working on computers in office

CLA’s Michael DePrima and Patrick Smith sit down to discuss the Section 174 update and what it could mean for technology companies come 2022.

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Section 174 of the Internal Revenue Code is slated for major changes in January 2022, and it will impact organizations of all sizes. In this installment of Technology Tax Insights, CLA’s Michael DePrima and Patrick Smith discuss some tips for navigating these changes, and how to possibly lessen the blow to technology companies.


What we talked about:

  • Summary of current Section 174
  • What changes the Tax Cuts and Jobs Act will cause in January 2022
    • R&D expense deduction versus capitalization and amortization
  • What the changes mean specifically for software companies
  • What should technology companies do now to start planning?
    • Cash tax situation
    • Offshoring and cost benefit analysis 

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