AICPA Seeks IRS Guidance on Immediate Deduction of Small Business Domestic Research Costs

The American Institute of CPAs (AICPA) has urged the U.S. Treasury Department and IRS to promptly issue guidance on Section 174A of the One Big Beautiful Bill Act, which affects the treatment of domestic research and experimental expenditures for small businesses. The AICPA requests that eligible small businesses be allowed to deduct domestic research costs directly on their originally filed 2024 federal income tax returns, rather than capitalizing them and potentially facing the need to amend returns later. This immediate deduction would reduce administrative burdens and compliance risks for taxpayers who have yet to file their 2024 returns. The guidance sought includes permitting amendments to 2022 and 2023 returns for domestic research costs and allowing adjustments to net operating losses in carryforward years instead of amending original returns. Reema Patel, AICPA's Senior Manager of Tax Policy & Advocacy, emphasized that such guidance would provide immediate tax relief and reduce uncertainty for taxpayers and practitioners alike. The AICPA is urging swift action to ensure clarity and efficient tax administration for impacted small businesses.