Tax Cuts and Jobs Act’s Change to R&D Credit
Research & development credits available to businesses are currently deductible in the applicable tax year, encouraging growth and investment. A change in the deductibility of this credit will go into effect as of January 1, 2020. As of this date, the credit obtained through research and development costs will no longer be deductible in the tax year incurred and instead will be amortized over a period of five years. This change will add to the accounting burden by having to keep track of the available amortized credit for each tax year.
Potential upcoming research and development projects may want to be accelerated into the 2020 and 2021 tax years.
It should be noted that R&D activities that take place outside of the United States can be included and are amortized over fifteen years.
For more information read: https://www.thetaxadviser.com/newsletters/2019/tcja-effect-research-development-tax-credit-planning.html