§ 174. Amortization of research and experimental expenditures

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1954

   Aug. 16, 1954, ch. 736, 68A Stat. 66 · 68A Stat. 66

   Enacted · 26 U.S.C. § 174

   Aug. 16, 1954, ch. 736, 68A Stat. 66

   Source evidence

   Code source credit
   Aug. 16, 1954, ch. 736, 68A Stat. 66

2. 1976

   Pub. L. 94–455 § 1906(b)(13)(A) · 90 Stat. 1520

   Struck · 26 U.S.C. § 174(a)(2)(A)

   Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”

   Source evidence

   Code amendment note
   Subsec. (a)(2)(A). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

   Enacted provision · exact public law section
   (A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”.

3. 1976

   Pub. L. 94–455 § 1901(a)(30) · 90 Stat. 1520

   Substituted · 26 U.S.C. § 174(a)(2)(A)(i)

   Pub. L. 94–455, § 1901(a)(30), substituted “August 16, 1954” for “the date on which this title is enacted” after “ends after”

   Source evidence

   Code amendment note
   Subsec. (a)(2)(A)(i). Pub. L. 94–455, § 1901(a)(30), substituted “August 16, 1954” for “the date on which this title is enacted” after “ends after”.

   Enacted provision · exact public law section
   (30) Amendments of sections 174 and 175.— Section 174(a)(2) 26 USC 174, 175. (A)(1) (relating to research and development expenditures) and section 175(d)(1)(A) (relating to soil and water conservation expenditures) are each amended by striking out “the date on which this title is enacted,” and inserting in lieu thereof “August. 16, 1954,”.

4. 1976

   Pub. L. 94–455 § 1906(b)(13)(A) · 90 Stat. 1520

   Struck · 26 U.S.C. § 174(a)(3); 26 U.S.C. § 174(b)(1); 26 U.S.C. § 174(a)(2)

   Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”

   Source evidence

   Code amendment note
   Subsecs. (a)(3), (b)(1), (2). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

   Enacted provision · exact public law section
   (A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”.

5. 1982

   Pub. L. 97–248 § 201(d)(9)(B) · 96 Stat. 324

   1. Substituted · 26 U.S.C. § 174(e)

      Pub. L. 97–248, § 201(d)(9)(B), substituted “Cross references” for “Cross reference” in heading

   2. Amended · 26 U.S.C. § 174(e)

      Pub. L. 97–248, § 201(d)(9)(B), designated existing provisions as par. (1)

   3. Added · 26 U.S.C. § 174(e)

      Pub. L. 97–248, § 201(d)(9)(B), added par. (2)

   Source evidence

   Code amendment note
   Subsec. (e). 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).

   Enacted provision · exact public law section
   “(d) Cross Reference.— “For election of 10-year amortization of expenditures allowable as a deduction under subsection (a), see section 58(i).” (D) Section 617 (relating to deduction of certain mining exploration 26 USC 617. expenditures) is amended by adding at the end thereof the following new subsection:

6. 1986

   Tax Reform Act of 1986

   Pub. L. 99–514 title VII § 701(e)(4)(D) · 100 Stat. 2085

   Substituted · 26 U.S.C. § 174(e)(2)

   Pub. L. 99–514 substituted “section 59(d)” for “section 58(i)”

   Source evidence

   Code amendment note
   Subsec. (e)(2). Pub. L. 99–514 substituted “section 59(d)” for “section 58(i)”.

   Enacted provision · exact public law section
   (D) Section 173(b), 174(e)(2), 263(c), and 1016(a)(24) (as redesignated by section 634(b)(2)) are each amended by striking out “section 58(i)” and inserting in lieu thereof “section 59(d)”.

7. 1988

   Technical and Miscellaneous Revenue Act of 1988

   Pub. L. 100–647 title I § 1007(g)(5) · 102 Stat. 3342

   Substituted · 26 U.S.C. § 174(e)(2)

   Pub. L. 100–647 substituted “section 59(e)” for “section 59(d)”

   Source evidence

   Code amendment note
   Subsec. (e)(2). Pub. L. 100–647 substituted “section 59(e)” for “section 59(d)”.

   Enacted provision · exact public law section
   (5) Sections 173(b), 174(e)(2), and 263(c) of the 1986 Code are each amended by striking out “section 59(d)” and inserting in lieu thereof “section 59(e)”.

8. 1989

   Revenue Reconciliation Act of 1989

   Pub. L. 101–239 title VII § 7110(d) · 103 Stat. 2106

   1. Added · 26 U.S.C. § 174(e); 26 U.S.C. § 174(f)

      Pub. L. 101–239 added subsec. (e)

   2. Redesignated · 26 U.S.C. § 174(e); 26 U.S.C. § 174(f)

      Pub. L. 101–239 redesignated former subsec. (e) as (f)

   Source evidence

   Code amendment note
   Subsecs. (e), (f). Pub. L. 101–239 added subsec. (e) and redesignated former subsec. (e) as (f).

   Enacted provision · exact public law section
   (d) Only Reasonable Research Expenditures Eligible for Section 174.— Section 174 is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: “(e) Only Reasonable Research Expenditures Eligible.— This section shall apply to a research or experimental expenditure only to the extent that the amount thereof is reasonable under the circumstances.”

9. 2014

   Tax Technical Corrections Act of 2014

   Pub. L. 113–295 § 221(a)(31) · 128 Stat. 4010

   Amended · 26 U.S.C. § 174(a)(2)(A)

   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—

   Source evidence

   Code amendment note
   Subsec. (a)(2)(A). 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.”

   Enacted provision · exact public law section
   (31) Research and experimental expenditures.— Subparagraph (A) of section 174(a)(2) is amended to read as follows: “(A) Without consent.— A taxpayer may, without the consent of the Secretary, adopt the method provided in this subsection for his first taxable year for which expenditures described in paragraph (1) are paid or incurred.” .

10. 2014

    Tax Technical Corrections Act of 2014

    Pub. L. 113–295 § 221(a)(32) · 128 Stat. 4010

    Struck · 26 U.S.C. § 174(b)(2)

    Pub. L. 113–295, § 221(a)(32), struck out “beginning after December 31, 1953” after “for any taxable year”

    Source evidence

    Code amendment note
    Subsec. (b)(2). Pub. L. 113–295, § 221(a)(32), struck out “beginning after December 31, 1953” after “for any taxable year”.

    Enacted provision · exact public law section
    (32) Amortization of certain research and experimental expenditures.— Paragraph (2) of section 174(b) is amended by striking “beginning after December 31, 1953”.

11. 2017

    Pub. L. 115–97 title I § 13206(a) · 131 Stat. 2054

    Amended · 26 U.S.C. § 174

    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

    Source evidence

    Code amendment note
    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.

    Enacted provision · exact public law section
    (a) In General.— Section 174 is amended to read as follows: “SEC. 174. AMORTIZATION OF RESEARCH AND EXPERIMENTAL EXPENDITURES. “(a) In General.— In the case of a taxpayer’s specified research or experimental expenditures for any taxable year— “(1) except as provided in paragraph (2), no deduction shall be allowed for such expenditures, and “(2) the taxpayer shall— “(A) charge such expenditures to capital account, and “(B) 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. “(b) Specified Research or Experimental Expenditures.— 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. “(c) Special Rules.— “(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 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.” .

12. 2025

    Pub. L. 119–21 § 70302(b)(1)(A)(i) · 139 Stat. 191

    Substituted · 26 U.S.C. § 174(a)

    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

    Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.

    Source evidence

    Code amendment note
    Subsec. (a). 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.

    Effective date note
    Amendment by Pub. L. 119–21 applicable to amounts paid or incurred in taxable years beginning after Dec. 31, 2024, except amendment by section 70302(b)(1)(C)(ii) of Pub. L. 119–21 shall apply to property disposed, retired, or abandoned after May 12, 2025, subject to election for retroactive application by certain small businesses and election to deduct certain unamortized amounts paid or incurred in taxable years beginning before Jan. 1, 2025, see section 70302(e), (f) of Pub. L. 119–21, set out as an Effective Date note under section 174A of this title.

13. 2025

    Pub. L. 119–21 § 70302(b)(1)(A)(ii) · 139 Stat. 191

    Substituted · 26 U.S.C. § 174(a)(2)(B)

    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)))”

    Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.

    Source evidence

    Code amendment note
    Subsec. (a)(2)(B). 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)))”.

    Effective date note
    Amendment by Pub. L. 119–21 applicable to amounts paid or incurred in taxable years beginning after Dec. 31, 2024, except amendment by section 70302(b)(1)(C)(ii) of Pub. L. 119–21 shall apply to property disposed, retired, or abandoned after May 12, 2025, subject to election for retroactive application by certain small businesses and election to deduct certain unamortized amounts paid or incurred in taxable years beginning before Jan. 1, 2025, see section 70302(e), (f) of Pub. L. 119–21, set out as an Effective Date note under section 174A of this title.

14. 2025

    Pub. L. 119–21 § 70302(b)(1)(B) · 139 Stat. 191

    1. Substituted · 26 U.S.C. § 174(b)

       Pub. L. 119–21, § 70302(b)(1)(B), substituted “Foreign” for “Specified” in text

    2. Substituted · 26 U.S.C. § 174(b)

       Pub. L. 119–21, § 70302(b)(1)(B), substituted “foreign research” for “specified research” in text

    3. Inserted · 26 U.S.C. § 174(b)

       Pub. L. 119–21, § 70302(b)(1)(B), inserted before period at end “and which are attributable to foreign research (within the meaning of section 41(d)(4)(F))”

    Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.

    Source evidence

    Code amendment note
    Subsec. (b). 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))”.

    Effective date note
    Amendment by Pub. L. 119–21 applicable to amounts paid or incurred in taxable years beginning after Dec. 31, 2024, except amendment by section 70302(b)(1)(C)(ii) of Pub. L. 119–21 shall apply to property disposed, retired, or abandoned after May 12, 2025, subject to election for retroactive application by certain small businesses and election to deduct certain unamortized amounts paid or incurred in taxable years beginning before Jan. 1, 2025, see section 70302(e), (f) of Pub. L. 119–21, set out as an Effective Date note under section 174A of this title.

15. 2025

    Pub. L. 119–21 § 70302(b)(1)(C) · 139 Stat. 191

    1. Substituted · 26 U.S.C. § 174(d)

       Pub. L. 119–21, § 70302(b)(1)(C), substituted “foreign research or experimental expenditures” for “specified research or experimental expenditures”

    2. Inserted · 26 U.S.C. § 174(d)

       Pub. L. 119–21, § 70302(b)(1)(C), inserted “or reduction to amount realized” after “no deduction”

    Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.

    Source evidence

    Code amendment note
    Subsec. (d). 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”.

    Effective date note
    Amendment by Pub. L. 119–21 applicable to amounts paid or incurred in taxable years beginning after Dec. 31, 2024, except amendment by section 70302(b)(1)(C)(ii) of Pub. L. 119–21 shall apply to property disposed, retired, or abandoned after May 12, 2025, subject to election for retroactive application by certain small businesses and election to deduct certain unamortized amounts paid or incurred in taxable years beginning before Jan. 1, 2025, see section 70302(e), (f) of Pub. L. 119–21, set out as an Effective Date note under section 174A of this title.

13 of 21 references resolved to an enrolled provision · 1 partial · 7 unresolved