You can amortize your R&D expenditures, deduct them as current business expenses, or write them off over an optional 10-year period. If you choose to amortize R&D expenditures, you deduct them in equal amounts over 60 months or more. The amortization period begins the month you first receive an economic benefit from the research.
Optional Write-Off Method
Rather than amortize R&D expenditures or deduct them as a current expense, you have the option of deducting (writing off) R&D expenditures ratably over a 10-year period beginning with the tax year in which you incurred the expenditures.
Expenditures You Can Amortize
You can amortize R&D expenditures chargeable to a capital account, if you meet both of the following conditions:
- You paid or incurred the R&D expenditures in your trade or business
- You are not deducting the expenditures currently
How To Make The Choice
To choose to amortize R&D expenditures, you enter your deduction in Part IV of Form 4562 and attach it to your income tax return. (See Form 4562 (PDF) & Instructions (PDF))
Generally, you must file the return by the due date (including extension(s)). If you timely filed your return for the year without making the choice, you can still make the choice by filing an amended return within 6 months of the due date of the return (excluding extension(s)).
You should attach Form 4562 to the amended return and write "Filed pursuant to section 301.9100-2" on Form 4562 and file the amended return at the same address you filed the original return. Your choice is binding for the year it is made and for all later years, unless you get IRS approval to change to a different method.