For many businesses, research and development (R&D) costs are a major expense—and a source of potentially significant tax questions. Two recent developments have complicated these questions. One is a new IRS memo announcing more stringent reporting requirements for some taxpayers claiming a widely-used tax credit; the other is a potential change in the deductibility of research expenses.
The recently passed American Rescue Plan Act (ARPA) includes 600 pages of new legislation- a $1.9 trillion COVID relief package. The Act contains retroactive and prospective tax breaks including exclusions from income, new tax-free grant programs, and credits.