Skip to main content

Taxes

IRS Issues Regs on Changing Accounting Method For Research Expenses

The regs pertain to the automatic consent to change accounting methods for expenditures paid or incurred after Dec. 31, 2021.

Jason Bramwell

Sep. 04, 2024

The IRS last week modified the procedures under Section 446 of the tax code and Treasury Regulation Section 1.446-1(e) for obtaining automatic consent to change methods of accounting for research or experimental expenditures paid or incurred in tax years beginning after Dec. 31, 2021.

Specifically, Revenue Procedure 2024-34, issued by the IRS on Aug. 29, does the following:

  • Expands the waiver of the eligibility rules in Rev. Proc. 2015-13 to accounting method changes described in Rev. Proc. 2024-23 that are made in any tax year beginning in 2022 or 2023.
  • Permits a taxpayer to make changes under Rev. Proc. 2024-23 regardless of whether a change under that section has been filed for any other tax year beginning in 2022 or 2023.

Also, for any change made in a tax year beginning in 2022 or 2023 (other than the first tax year beginning after Dec. 31, 2021), Rev. Proc 2024-34 limits audit protection for research or experimental expenditures paid or incurred in the taxpayer’s first tax year beginning after Dec. 31, 2021, if the taxpayer failed to make a change for such expenditures in the applicable tax year, according to the IRS.