Defined term
Section 174 capitalization
Also: §174 · R&D amortization · specified research or experimental expenditures
U.S. rules requiring research costs to be amortized rather than immediately expensed.
Internal Revenue Code Section 174 governs the tax treatment of research and experimental expenditures, including requirements in recent years to capitalize and amortize such costs over a multi-year period (with different periods often discussed for domestic versus foreign research). Section 174 interacts with, but is distinct from, the §41 credit. Book-tax differences and software development characterizations are frequent planning topics. Confirm current law and any legislative updates before modeling.
Related on the Index
Related terms
Common questions
- Does Section 174 determine the research credit?
- No. §174 addresses how R&E costs are recovered for taxable income. §41 is a separate credit regime that uses its own QRE definitions, though the two often involve overlapping projects.
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Educational definition only. Not tax or legal advice. Confirm current program rules with official guidance and a qualified adviser.