In the wake of the Internal Revenue Service’s (IRS) release of guidance in Notice 2023-63 concerning the capitalization of research & development (R&D) under Section 174, several attorneys from the tax group at Fenwick have expressed concerns that are imperative for corporations associated with technology, life sciences, and other industries deeply involved in substantial research and development. An article detailing their input on the IRS’s Notice 2023-63 can be found on JDSupra.
Fenwick’s working group on this issue have highlighted a few pivotal subjects that the IRS and the U.S. Treasury Department should carefully consider. They take into account various provisions and adjustments that significantly impact corporations in various research-intensive industries.
- The treatment of contract R&D agreements has been raised as a critical concern.
- Section 280C’s adjustments concerning the research credit were profoundly discussed.
The full extent of Fenwick’s comments on these focal issues is yet to be widely reported, however, their initiative to clarify and improve IRS regulations for tangible industries demonstrates their continuous efforts to raise awareness and advance the taxation policy around research and development expenditures.
Such corporates within technology and life sciences sectors should closely watch these developments, as they may have considerable implications for their respective tax liabilities and R&D practices. Engaging in an informed dialogue on these matters may help not only to mitigate potential financial risks but also to shape a more streamlined, forward-thinking tax environment.