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aafeher23462
Level 2
11-07-2023
09:54 AM
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Any of you have clients filing for the R&D Credit under the TCJA requirements to amortize R&D costs over 5 years....
Looking for real world application. Just had a hypothetical discussion regarding compliance where three options, none of which are very appealing, were thrown out for discussion:
1) Full compliance -- take the R&D credit, capitalize all Sec. 174 costs and amortize over 5 years. This could increase tax expenses nearly $4MM
2) Assume Congress will pass an extension of the effective date beyond the sunset and file without changes... take the credit and ignore amortization requirement. This does NOT comply with current law, but assumes current law will be changed shortly.
3) Refuse to take the credit or amortize at all. Again, this does not comply with current law, but also does not raise the red "Audit Me" flag by claiming a credit.
My understanding is that many companies facing this dilemma are going with option 3. I know many will bite the bullet and go with option 1. Personally, I don't think option 2 is a good idea at all, but it was put out there. I know option 1 is the legit correct way to go. I'm just curious as to whether there has been many instances where option 1 was NOT followed, and how did they go about it?
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