1、CRS INSIGHT Prepared for Members and Committees of Congress INSIGHTINSIGHTi i Tax Treatment of Research Expenses: Current Law and Policy Issues March 11, 2022 Companies are allowed to deduct the ordinary and necessary expenses they pay or incur in determining their taxable income. Under Section 162(
2、a) of the federal tax code, current expenses (e.g., wages and salaries) are written off in full in the year when they are paid or incurred. Capitalized expenses (e.g., cost of equipment or patents) are recovered over longer periods under Sections 167 and 168, as the economic value of the acquired as
3、sets lasts longer than one year. This Insight discusses the current federal tax treatment of expenses companies pay or incur in investing in research and development (R&D) and the policy issues this treatment raises. Tax Treatment of Research Expenses Before 1954, the federal tax treatment of the ex
4、penses companies incurred or paid in undertaking R&D entailed a multitude of disputes between companies and the Internal Revenue Service (IRS). The disputes mainly concerned whether or not the expenses should be capitalized and amortized over five or more years as the IRS maintained. Congress clarif
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