Amended 1982, 1986, 1988, 1989, 2017
- 2017 Pub. L. 115-97 Pub. L. 115–97 amended section generally. Prior to amendment, section consisted of subsecs. (a) to (f) relating to treatment of research and experimental expenditures as expenses, amortization of certain research and experimental expenditures, expenditure for the acquisition or improvement of land or property, ore and mineral deposit exploration expenditures, limitation to reasonable research expenditures eligible, and cross references, respectively.
- 1989 Pub. L. 101-239 Pub. L. 101–239 added subsec. (e) and redesignated former subsec. (e) as (f).
- 1988 Pub. L. 100-647 Pub. L. 100–647 substituted “section 59(e)” for “section 59(d)”.
- 1986 Pub. L. 99-514 Pub. L. 99–514 substituted “section 59(d)” for “section 58(i)”.
- 1982 Pub. L. 97-248 Pub. L. 97–248, § 201(d)(9)(B), substituted “Cross references” for “Cross reference” in heading, designated existing provisions as par. (1), and added par. (2).
Cases: Kantor v. Commissioner, 998 F.2d 1514 (9th Cir. 1993); Harris v. Commissioner, 16 F.3d 75 (5th Cir. 1994); Snow v. Commissioner, 416 U.S. 500 (1974)
Final rules 2
(a) In general In the case of a taxpayer’s foreign research or experimental expenditures for any taxable year—
Amended 1976, 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70302(b)(1)(A)(i), substituted “a taxpayer’s foreign research or experimental expenditures” for “a taxpayer’s specified research or experimental expenditures” in introductory provisions.
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
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(1) except as provided in paragraph (2), no deduction shall be allowed for such expenditures, and
(2) the taxpayer shall—
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(A) charge such expenditures to capital account, and
Amended 1976, 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(31), amended subpar. (A) generally. Prior to amendment, text read as follows: “A taxpayer may, without the consent of the Secretary, adopt the method provided in this subsection for his first taxable year—
“(i) which begins after December 31, 1953, and ends after August 16, 1954, and
“(ii) for which expenditures described in paragraph (1) are paid or incurred.”
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(a)(30), substituted “August 16, 1954” for “the date on which this title is enacted” after “ends after”.
(B) 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.
Amended 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70302(b)(1)(A)(ii), substituted “over the 15-year period” for “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)))”.
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(b) Foreign research or experimental expenditures 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)).
Amended 1976, 2014, 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70302(b)(1)(B), substituted “Foreign” for “Specified” in heading and “foreign research” for “specified research” in text and inserted before period at end “and which are attributable to foreign research (within the meaning of section 41(d)(4)(F))”.
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(32), struck out “beginning after December 31, 1953” after “for any taxable year”.
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
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(c) Special rules
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(1) Land and other property 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.
(2) Exploration 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).
(3) Software development 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.
(d) Treatment upon disposition, retirement, or abandonment 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.
Amended 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70302(b)(1)(C), substituted “foreign research or experimental expenditures” for “specified research or experimental expenditures” and inserted “or reduction to amount realized” after “no deduction”.