American Innovation and R&D Competitiveness Act of 2023
This bill eliminates the five-year amortization requirement for research and experimental expenditures, thus allowing continued expensing of such expenditures in the taxable years in which they are incurred.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2673 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 2673
To amend the Internal Revenue Code of 1986 to restore the deduction for
research and experimental expenditures.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 18, 2023
Mr. Estes (for himself, Mr. Larson of Connecticut, Mr. LaHood, Ms.
DelBene, Mr. Arrington, Mr. Panetta, Mr. Buchanan, Mr. Blumenauer, Mr.
Smith of Nebraska, Mr. Pascrell, Mr. Kelly of Pennsylvania, Mr. Davis
of Illinois, Mr. Schweikert, Ms. Sewell, Mr. Wenstrup, Mr. Kildee, Mr.
Ferguson, Mr. Beyer, Mr. Smucker, Mr. Evans, Mr. Hern, Ms. Bonamici,
Mrs. Miller of West Virginia, Mr. Stanton, Mr. Kustoff, Ms. Davids of
Kansas, Mr. Fitzpatrick, Mr. Veasey, Mr. Moore of Utah, Mr. Neguse, Ms.
Van Duyne, Ms. Slotkin, Mr. Feenstra, Ms. Wexton, Mr. Carey, Mr.
Cuellar, Mr. Barr, Mr. Gottheimer, Mr. Bacon, Ms. Brownley, Mr.
Huizenga, Mr. Morelle, Mr. Johnson of Ohio, Mr. Courtney, Mr. Carter of
Georgia, Mr. Connolly, Mrs. Lesko, Mr. Trone, Mr. Reschenthaler, Ms.
Ross, Mrs. Harshbarger, Mr. Moulton, Mr. Calvert, Mr. Khanna, Mr.
Crawford, Ms. Scholten, Mr. Davidson, Ms. Titus, Mr. Mann, Ms. Stevens,
Mr. Moolenaar, Ms. Kaptur, Mr. Joyce of Pennsylvania, Ms. Sherrill, Mr.
Bost, and Ms. Blunt Rochester) introduced the following bill; which was
referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to restore the deduction for
research and experimental expenditures.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``American Innovation and R&D
Competitiveness Act of 2023''.
SEC. 2. RESEARCH AND EXPERIMENTAL EXPENDITURES.
(a) In General.--Section 174 of the Internal Revenue Code of 1986
is amended to read as follows:
``SEC. 174. RESEARCH AND EXPERIMENTAL EXPENDITURES.
``(a) Treatment as Expenses.--
``(1) In general.--A taxpayer may treat research or
experimental expenditures which are paid or incurred by him
during the taxable year in connection with his trade or
business as expenses which are not chargeable to capital
account. The expenditures so treated shall be allowed as a
deduction.
``(2) When method may be adopted.--
``(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.
``(B) With consent.--A taxpayer may, with the
consent of the Secretary, adopt at any time the method
provided in this subsection.
``(3) Scope.--The method adopted under this subsection
shall apply to all expenditures described in paragraph (1). The
method adopted shall be adhered to in computing taxable income
for the taxable year and for all subsequent taxable years
unless, with the approval of the Secretary, a change to a
different method is authorized with respect to part or all of
such expenditures.
``(b) Amortization of Certain Research and Experimental
Expenditures.--
``(1) In general.--At the election of the taxpayer, made in
accordance with regulations prescribed by the Secretary,
research or experimental expenditures which are--
``(A) paid or incurred by the taxpayer in
connection with his trade or business,
``(B) not treated as expenses under subsection (a),
and
``(C) chargeable to capital account but not
chargeable to property 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),
may be treated as deferred expenses. In computing taxable
income, such deferred expenses shall be allowed as a deduction
ratably over such period of not less than 60 months as may be
selected by the taxpayer (beginning with the month in which the
taxpayer first realizes benefits from such expenditures). Such
deferred expenses are expenditures properly chargeable to
capital account for purposes of section 1016(a)(1) (relating to
adjustments to basis of property).
``(2) Time for and scope of election.--The election
provided by paragraph (1) may be made for any taxable year, but
only if made not later than the time prescribed by law for
filing the return for such taxable year (including extensions
thereof). The method so elected, and the period selected by the
taxpayer, shall be adhered to in computing taxable income for
the taxable year for which the election is made and for all
subsequent taxable years unless, with the approval of the
Secretary, a change to a different method (or to a different
period) is authorized with respect to part or all of such
expenditures. The election shall not apply to any expenditure
paid or incurred during any taxable year before the taxable
year for which the taxpayer makes the election.
``(c) 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.
``(d) 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).
``(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.''.
(b) Clerical Amendment.--The table of sections for part VI of
subchapter B of chapter 1 of such Code is amended by striking the item
relating to section 174 and inserting the following new item:
``Sec. 174. Research and experimental expenditures''.
(c) Conforming Amendments.--
(1) Section 41(d)(1)(A) of such Code is amended by striking
``specified research or experimental expenditures under section
174'' and inserting ``expenses under section 174''.
(2) Section 280C(c) of such Code is amended to read as
follows:
``(c) Credit for Increasing Research Activities.--
``(1) In general.--No deduction shall be allowed for that
portion of the qualified research expenses (as defined in
section 41(b)) or basic research expenses (as defined in
section 41(e)(2)) otherwise allowable as a deduction for the
taxable year which is equal to the amount of the credit
determined for such taxable year under section 41(a).
``(2) Similar rule where taxpayer capitalizes rather than
deducts expenses.--If--
``(A) the amount of the credit determined for the
taxable year under section 41(a)(1), exceeds
``(B) the amount allowable as a deduction for such
taxable year for qualified research expenses or basic
research expenses (determined without regard to
paragraph (1)),
the amount chargeable to capital account for the taxable year
for such expenses shall be reduced by the amount of such
excess.
``(3) Election of reduced credit.--
``(A) In general.--In the case of any taxable year
for which an election is made under this paragraph--
``(i) paragraphs (1) and (2) shall not
apply, and
``(ii) the amount of the credit under
section 41(a) shall be the amount determined
under subparagraph (B).
``(B) Amount of reduced credit.--The amount of
credit determined under this subparagraph for any
taxable year shall be the amount equal to the excess
of--
``(i) the amount of credit determined under
section 41(a) without regard to this paragraph,
over
``(ii) the product of--
``(I) the amount described in
clause (i), and
``(II) the rate of tax under
section 11(b).
``(C) Election.--An election under this paragraph
for any taxable year shall be made not later than the
time for filing the return of tax for such year
(including extensions), shall be made on such return,
and shall be made in such manner as the Secretary may
prescribe. Such an election, once made, shall be
irrevocable.
``(4) Controlled groups.--Paragraph (3) of subsection (b)
shall apply for purposes of this subsection.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2021.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
Sponsor introductory remarks on measure. (CR H1898)
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