> "Is Section 174 Needed to Deduct R&E Expenses?"

> "In a word, no. During the Supreme Court oral arguments regarding Section 174, the IRS commissioner said that any ongoing business with a history of R&E expenditures could use Section 162, regardless of whether the new activities were in the same trade or business."

This article seems to gloss over the fact that Section 174 was essentially crossed out and rewritten in the TCJA. You can compare the previous version with the new version here: https://law.justia.com/codes/us/2020/title-26/subtitle-a/cha... (Compare the "Section Text" which applies pre-2022, to the amended version under "Editorial Notes" which takes effect in 2022.)

Court rulings and IRS commissioner statements which referred to the previous version of Section 174 may no longer be relevant. The previous version stated:

> "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.".

Okay, if it says a taxpayer "may", that does not mean the taxpayer "must", and it makes sense that the alternative Section 162 deduction was still available for the same expense.

The new version states:

> "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"

Paragraph (2) then describes the allowed amortization process. Note that any language suggesting this treatment is optional was removed in the new version. This suggests to me that Section 174 is now intended to supercede Section 162 when applied to research or experimental expenditures and therefore the Section 162 deduction may no longer be available.