You can amortize your research and experimental costs, deduct them
as current business expenses, or write them off over a 10-year period.
If you choose to amortize these costs, deduct them in equal amounts
over 60 months or more. The amortization period begins the month you
first receive an economic benefit from the research. For a definition
of "research and experimental costs" and information on deducting
them as current business expenses, see chapter 8.
Optional write-off method.
Rather than amortize these costs or deduct them as a current
expense, you have the option of deducting (writing off) research and
experimental costs ratably over a 10-year period beginning with the
tax year in which you incurred the costs.
For more information on the optional write-off method, see Internal
Revenue Code section 59(e).
Costs you can amortize.
You can amortize costs chargeable to a capital account if you meet
both the following requirements.
- You paid or incurred the costs in your trade or
business.
- You are not deducting the costs currently.
How to make the choice.
To choose to amortize research and experimental costs, enter your
deduction in Part VI of Form 4562 and attach it to your income tax
return. Generally, you must file the return by the due date (including
extensions). However, if you timely filed your return for the year
without making the choice, you can still make the choice by filing an
amended return within 6 months of the due date of the return
(excluding extensions). Attach Form 4562 to the amended return and
write "FILED PURSUANT TO SECTION 301.9100-2" on Form 4562.
File the amended return at the same address you filed the original
return.
Your choice is binding for the year it is made and for all later
years unless you get IRS approval to change to a different method.
More information.
For more information on amortizing research and development costs,
see section 174 of the Internal Revenue Code and the related
regulations.
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