PODCAST

Capitalization Punishment: The New Rules of Section 174

Inside International Tax, Episode 03-2022 | How will mandatory capitalization of R&E affect multinational corporations?

Gary Scanlon

Gary Scanlon

Principal, International Tax, Washington National Tax, KPMG US

Danielle E. Rolfes

Danielle E. Rolfes

Partner, Co-lead International Tax, Washington National Tax, KPMG US

Jennifer Gray

Jennifer Gray

Director, Federal Legislative & Regulatory Services, KPMG US

+1 202-533-3489

Stefanie Humphrey

Stefanie Humphrey

Managing Director, Accounting Methods & Credit Services, KPMG US

+1 212-872-2161

Podcast overview

While the changes to section 174 were enacted in the TCJA, their effect was delayed until 2022. Taxpayers who had hoped to be saved by the bell (or the BBBA) now face mandatory capitalization and amortization of their R&E expenses. Whether mandatory capitalization ever hits a tax return may be uncertain, but taxpayers must still deal with the very real, very current impacts of these changes on their financial statements and estimated taxes. What is the future of mandatory capitalization? How will these rules impact FDII, GILTI, BEAT, and foreign tax credits? Which of these impacts are timing differences, and which are permanent? Are there any knock-on effects that taxpayers should be aware of?

Our host Gary Scanlon interviews Danielle Rolfes from KPMG Washington National Tax International group, Jennifer Gray from the KPMG Federal Legislative & Regulatory Services group, and Stefanie Humphrey from the KPMG Accounting Methods & Credit Services practice to help elucidate some of the international tax considerations relating to section 174.

 

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