Sec. 3315. Amortization of research and experimental expenditures
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Section 174 is amended to read as follows: In the case of a taxpayer’s specified 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 5-year period (15-year period in the case of any specified research or experimental expenditures which are attributable to foreign research (within the meaning of section 41(d)(4)(F))) beginning with the midpoint of the taxable year in which such expenditures are paid or incurred.
For purposes of this section, the term specified 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. 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 specified 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 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. .
The table of sections for part VI of subchapter B of chapter 1 is amended by striking the item relating to section 174 and inserting the following new item: Sec. 174. Amortization of research and experimental expenditures. . The amendments made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2022.