When the IRS issues preliminary regulations and asks for comments and not enough people respond, it’s not a leap of faith for the IRS to assume that the regulations are good as written. Trust me, this is NOT the case!
If you haven’t heard, IRS Notice 2023-63 calls for all government-funded R&D companies to capitalize and amortize their R&D expenses over 5 years, (with a 50% deduction in year 1) instead of deducting the full expense amount in the year it was incurred. So:
Revenue | $1,000,000 |
Real expenses | $1,000,000 |
Tax deductible portion in year one | $100,000 ($1M/5 yrs. x 50%) |
Taxable income | $900,000 |
Federal (21%) and State (9%) Income Tax | $270,000 |
While legislative relief MAY happen, we wouldn’t count on anything until after the next presidential election… Someone else isn’t going to save you. You need to step up and become part of our VOICE. As I write this plea to the SBIR community, there are only 129 comments, so either you don’t know, think someone else is going to fix this, or have other sources of funding to pay for your corporate income taxes.
In my honest opinion, being anonymous is not as effective as leaving a personal, real comment. We’d recommend something like this:
Please do not delay. The comment window closes on November 24 – the day after Thanksgiving. Click the blue “comment” button in the upper left corner of this URL to leave your comment at Regulations.gov
Thank You and Happy Thanksgiving to All,
Ed Jameson, CPA
Managing Partner
I’ve been in practice for over 40 years helping our small business clients procure, manage, and survive audits on more than $6 billion in federal government contract and grant funding. We’ve been featured presenters and panel moderators at Tech Connect’s National SBIR/STTR conferences since 2010, and I’ve presented at the DOD’s Mentor Protégé Summit and present regularly for several state and local organizations.
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