Rev. Proc. 2025-28 — Rev. Proc. 2025-28

# preamble

Part III

Administrative, Procedural, and Miscellaneous

26 CFR 601.204: Changes in accounting periods and in methods of accounting.
(Also, Part 1, §§ 174, 174A, 280C, 446; 1.280C-4, 1.446-1.)

Rev. Proc. 2025-28

# SECTION 1. PURPOSE

This revenue procedure provides procedures for making certain elections under
§ 70302(f) of Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the
One, Big, Beautiful Bill Act (OBBBA), for domestic research or experimental
expenditures. This revenue procedure modifies procedures under § 446 of the Internal
Revenue Code (Code)
1 and § 1.446-1(e) for obtaining automatic consent of the
Commissioner of Internal Revenue (Commissioner) to (i) change methods of accounting
for research or experimental expenditures under § 174, as in effect after amendment by

1 Unless otherwise specified, all "section" or "§" references are to sections of the Code, the Income Tax
Regulations (26 CFR part 1), or the Procedure and Administration Regulations (26 CFR Part 301).

§ 13206(a) of Public Law 115-97, 131 Stat. 2054 (Dec. 22, 2017), commonly known as
the Tax Cuts and Jobs Act (TCJA), and prior to amendment by § 70302(b)(1) of the
OBBBA, and (ii) change methods of accounting to comply with §§ 174 and 174A (as
amended and enacted by the OBBBA, respectively). This revenue procedure also
provides procedures for making elections under § 174A(c) to amortize domestic
research or experimental expenditures paid or incurred in taxable years beginning after
December 31, 2024. Finally, for a taxable year beginning during 2024 and ending prior
to September 15, 2025, for which the due date (excluding any extension) for the return
of tax for such taxable year was before September 15, 2025 (2024 taxable year),
section 8 of this revenue procedure grants an automatic extension of time to file
superseding tax and information returns applying the provisions of this revenue
procedure.

# SECTION 2. BACKGROUND

.01 Certain terms used in this revenue procedure.
(1) References to § 70302 of the OBBBA. All references hereinafter in this
revenue procedure to "OBBBA § 70302" refer to provisions of § 70302 of the OBBBA.
(2) R eferences to § 174. All references in this revenue procedure to "TCJA § 174"
refer to § 174, as in effect after amendment by § 13206(a) of the TCJA, and prior to
amendment by OBBBA § 70302(b)(1). All references in this revenue procedure to
"§ 174" refer to § 174 as amended by OBBBA § 70302(b)(1).
(3) R
eferences to § 280C. All references in this revenue procedure to "TCJA
§ 280C" refer to § 280C as in effect after amendment by the TCJA and prior to
amendment by OBBBA § 70302(b)(2)(B). All references in this revenue procedure to

"§ 280C" refer to § 280C as amended by OBBBA § 70302(b)(2)(B).
(4) References to specified research or experimental expenditures. All references
to "specified research or experimental expenditures" and "SRE expenditures" refer to
research or experimental expenditures paid or incurred in taxable years beginning after
December 31, 2021, and before January 1, 2025, under TCJA § 174. All references to
"domestic research or experimental expenditures under TCJA § 174" refer to SRE
expenditures other than SRE expenditures attributable to foreign research (within the
meaning of § 41(d)(4)(F)).
.02 T
reatment of research or experimental expenditures under TCJA § 174. For
expenditures paid or incurred in taxable years beginning after December 31, 2021,
TCJA § 174 requires taxpayers to charge SRE expenditures to capital account and
allows amortization deductions of such capitalized expenditures ratably over a 5-year
period in the case of SRE expenditures attributable to domestic research, or a 15-year
period in the case of SRE expenditures attributable to foreign research (within the
meaning of § 41(d)(4)(F)), beginning with the midpoint of the taxable year in which such
expenditures are paid or incurred. The procedures in sections 7.01 and 7.03 of Rev.
Proc. 2025-23, 2025-24 I.R.B. 1476, as modified by this revenue procedure, provide
automatic changes in method of accounting for research or experimental expenditures
under TCJA § 174 for amounts paid or incurred in taxable years beginning before
January 1, 2025.
.03 T
reatment of foreign research or experimental expenditures under § 174.
(1) OBBBA § 70302(b)(1) amended TCJA § 174 to provide that § 174 applies only
to foreign research or experimental expenditures and that such expenditures continue to

be amortized ratably over a 15-year period beginning with the midpoint of the taxable
year in which such expenditures are paid or incurred. Under § 174(b), as amended by
OBBBA § 70302(b)(1)(B), foreign research or experimental expenditures are research
or experimental expenditures which are paid or incurred by the taxpayer during a
taxable year in connection with the taxpayer's trade or business which are attributable
to foreign research (within the meaning of § 41(d)(4)(F)). OBBBA § 70302(e)(1)
provides that these amendments apply to amounts paid or incurred in taxable years
beginning after December 31, 2024.
(2) OBBBA § 70302(b)(1)(C) amended TCJA § 174(d) to provide that, if any
property with respect to which foreign research or experimental expenditures are paid or
incurred is disposed, retired, or abandoned during the period during which such
expenditures are allowed as an amortization deduction under this section, no deduction
or reduction to amount realized is allowed with respect to such expenditures on account
of such disposition, retirement, or abandonment and such amortization deduction
continues with respect to such expenditures. OBBBA § 70302(e)(2)(A) provides that
these amendments to § 174(d) apply to property disposed, retired, or abandoned after
May 12, 2025.
(3) The procedures in section 7.03 of Rev. Proc. 2025-23, as modified by this
revenue procedure, provide an automatic change in method of accounting for foreign
research or experimental expenditures under TCJA § 174 for amounts paid or incurred
in taxable years beginning before January 1, 2025, and for foreign research or
experimental expenditures under § 174 for amounts paid or incurred in taxable years
beginning after December 31, 2024.

.04 Treatment of domestic research or experimental expenditures under § 174A.
(1) OBBBA § 70302(a) amended Part VI of subchapter B of chapter 1 of subtitle A
of the Code by adding § 174A.
(2) Section 174A(a) provides that, notwithstanding § 263, a deduction is allowed
for any domestic research or experimental expenditures which are paid or incurred by
the taxpayer during the taxable year.
(3) Section 174A(b) provides that, for purposes of § 174A, the term "domestic
research or experimental expenditures" means research or experimental expenditures
paid or incurred by the taxpayer in connection with the taxpayer's trade or business
other than such expenditures which are attributable to foreign research (within the
meaning of § 41(d)(4)(F)).
(4) Section 174A(c)(1) allows a taxpayer to make an election, in the case of
domestic research or experimental expenditures which would (but for § 174A(a)) be
chargeable to capital account but not chargeable to property of a character which is
subject to the allowance under § 167 (relating to allowance for depreciation, etc.) or
§ 611 (relating to allowance for depletion), to charge such expenditures to capital
account and amortize such expenditures ratably over a period of not less than 60
months, beginning with the month in which the taxpayer first realizes benefits from such
expenditures. Under § 174A(c)(1), such election is made in accordance with
regulations or other guidance provided by the Secretary of the Treasury or the
Secretary's delegate (Secretary). Section 174A(c)(2) provides that the election
described in § 174A(c)(1) may be made for any taxable year, but only if made not later
than the time prescribed by law for filing the return for such taxable year (including

extensions thereof). The procedures in section 6 of this revenue procedure provide
guidance on making an election under § 174A(c) for expenditures paid or incurred in
taxable years beginning after December 31, 2024.
(5) Section 174A(c)(2) further provides that a taxpayer's computation of taxable
income for the taxable year for which the election is made, and for all subsequent
taxable years, must be based on the method the taxpayer has elected and the
amortization period the taxpayer has selected. The taxpayer may, with the approval of
the Secretary, change to a different method, or a different period, with respect to part or
all of such expenditures. The election does not apply to any expenditures paid or
incurred during any taxable year before the taxable year for which the taxpayer makes
the election.
(6) Section 174A(d)(1) provides that § 174A does not apply to any expenditure for
the acquisition or improvement of land, or for the acquisition or improvement of property
to be used in connection with the research or experimentation and of a character which
is subject to the allowance under § 167 or § 611; but for purposes of § 174A,
allowances under § 167 and allowances under § 611 are considered as expenditures.
(7) Section 174A(d)(2) provides that § 174A does not apply to any expenditure paid
or incurred for the purpose of ascertaining the existence, location, extent, or quality of
any deposit of ore or other mineral (including oil and gas).
(8) Section 174A(d)(3) provides that, for purposes of § 174A, any amount paid or
incurred in connection with the development of any software is treated as a research or
experimental expenditure.
(9) OBBBA § 70302(e)(1) provides that, generally, the amendments made by

OBBBA § 70302 to add § 174A to the Code apply to amounts paid or incurred in taxable
years beginning after December 31, 2024.
(10) OBBBA § 70302(c)(1) provides that, generally, the amendments made by
OBBBA § 70302 to add § 174A to the Code are treated as a change in method of
accounting for purposes of § 481 that is (i) treated as initiated by the taxpayer,
(ii) treated as made with the consent of the Secretary, and (iii) applied only on a cut-off
basis for any domestic research or experimental expenditures paid or incurred in
taxable years beginning after December 31, 2024, and that no adjustments under
§ 481(a) may be made. The procedures in section 7.02 of Rev. Proc. 2025-23, as
modified by this revenue procedure, provide an automatic change in method of
accounting for domestic research or experimental expenditures paid or incurred in
taxable years beginning after December 31, 2024, to change to a method of accounting
provided in § 174A.
(11) OBBBA § 70302(c)(2) provides special rules for changes in method of
accounting for a taxable year that begins after December 31, 2024, and ends before
July 4, 2025 (the date of enactment of the OBBBA). The procedures in section 7.02 of
Rev. Proc. 2025-23, as modified by this revenue procedure, provide transition rules for
taxpayers with short 2025 taxable years that are changing their method of accounting
under § 174A for amounts paid or incurred in taxable years beginning after December
31, 2024.
.05 OBBBA amendment to § 280C(c)(1) and continued application of § 280C(c)(2).
(1) TCJA § 280C(c)(1) provides that if the amount of the research credit for the
taxable year under § 41(a)(1) exceeds the amount allowable as a deduction for such

taxable year for qualified research expenses or basic research expenses, then the
amount chargeable to capital account for the taxable year for such expenses is reduced
by the amount of such excess.
(2) OBBBA § 70302(b)(2)(B) amended TCJA § 280C(c)(1) to provide that the
domestic research or experimental expenditures (as defined in § 174A(b)) otherwise
taken into account as a deduction or charged to capital account under chapter 1 of the
Code are reduced by the amount of the credit allowed under § 41(a). OBBBA
§ 70302(e)(4) makes clear that this amendment does not create any inference with
respect to the proper application of § 280C(c) with respect to taxable years beginning
before January 1, 2025.
(3) Section 280C(c)(2)(A) allows taxpayers to elect to receive a reduced credit
under § 41(a), in lieu of reducing the amount of domestic research or experimental
expenditures otherwise taken into account as a deduction or charged to capital account.
Section 280C(c)(2)(C) provides that an election under § 280C(c)(2) for any taxable year
must be made not later than the time for filing the return of tax for such year (including
extensions), and that such election is irrevocable. The OBBBA made no amendments
to § 280C(c)(2).
.06 Treatment of domestic research or experimental expenditures previously subject
to TCJA § 174.
(1) In general.
(a) Notwithstanding the effective date provided in OBBBA § 70302(e)(1), which
provides that the OBBBA amendments apply to amounts paid or incurred in taxable
years beginning after December 31, 2024, OBBBA § 70302(f) provides transition rules

for domestic research or experimental expenditures that allow an election to change the
amortization period over which any remaining unamortized amount arising from the
application of TCJA § 174 is taken into account, as well as an election for retroactive
application of OBBBA § 70302 by certain eligible taxpayers.
(b) OBBBA § 70302(f)(2)(A) provides that, in the case of domestic research or
experimental expenditures paid or incurred in taxable years beginning after December
31, 2021, and before January 1, 2025, and which were charged to capital account under
TCJA § 174, a taxpayer may elect to amortize any remaining unamortized amount with
respect to such expenditures in full in the first taxable year beginning after December
31, 2024, or alternatively, amortize such remaining unamortized amount with respect to
such expenditures ratably over the 2-taxable year period beginning with the first taxable
year beginning after December 31, 2024.
(c) OBBBA § 70302(f)(2)(B) provides that a taxpayer that makes an election
under OBBBA § 70302(f)(2)(A) is treated as initiating a change in method of accounting
for purposes of § 481 with respect to the expenditures to which the election applies.
Further, the change is treated as made with the consent of the Secretary and must be
applied only on a cut-off basis for such expenditures, and no adjustments under § 481
may be made. The procedures in section 7.02 of Rev. Proc. 2025-23, as modified by
this revenue procedure, provide an automatic change in method of accounting for
amortizing the remaining unamortized amount previously capitalized under TCJA § 174
under OBBBA § 70302(f)(2).
(2) Small business taxpayers.
(a) OBBBA § 70302(f)(1)(A) provides that, at the election of an "eligible

taxpayer," § 174A applies to amounts paid or incurred in taxable years beginning after
December 31, 2021, and § 280C, as amended by OBBBA § 70302(b)(2)(B), applies in
taxable years beginning after December 31, 2021. An eligible taxpayer making an
election under OBBBA § 70302(f)(1)(A) generally must file an amended return for each
taxable year affected by such election. OBBBA § 70302(f)(1)(B) defines an "eligible
taxpayer" as any taxpayer (other than a tax shelter prohibited from using the cash
receipts and disbursements method of accounting under § 448(a)(3)) which meets the
gross receipts test of § 448(c) for the first taxable year beginning after December 31,
2024.
(b) OBBBA § 70302(f)(1)(A) provides that this election must be made in the
manner provided by the Secretary and not later than the date that is one year after the
date of enactment of the OBBBA, which is July 4, 2026. Section 7503 provides where
the last day for performing an act under the internal revenue laws falls on a Saturday,
Sunday, or legal holiday, the performance of such act will be considered timely if it is
completed on the next succeeding day that is not a Saturday, Sunday, or legal holiday.
Because July 4, 2026, is a Saturday, the election under OBBBA § 70302(f)(1)(A) must
be made by Monday, July 6, 2026. The OBBBA did not modify, or provide an exception
to, the statutory period of limitations on filing a claim for credit or refund under § 6511 for
purposes of the elections under OBBBA § 70302(f). Section 6511(a) generally provides
that a claim for credit or refund is timely if it is filed by the taxpayer within three years
from the time the return was filed or two years from the time the tax was paid, whichever
period expires later. Section 6511(b) provides limits on the amount of a claim for credit
or refund. Section 6511(b)(2)(A) generally provides that for a claim filed within the

three-year period under § 6511(a), the amount of the credit or refund cannot exceed the
portion of tax paid within the period, immediately preceding the filing of the claim, equal
to three years plus the period of any extension of time for filing that return. Section
6511(b)(2)(B) generally provides that if a claim is not filed within the three-year period,
the amount of the credit or refund may not exceed the portion of the tax paid during the
two years immediately preceding the filing of the claim. Under § 6513(a), for purposes
of § 6511, any return filed before the last day prescribed for the filing thereof is
considered filed on such last day.
(c) Section 3 of this revenue procedure sets forth the procedures under which an
eligible taxpayer may elect to retroactively apply § 174A under OBBBA § 70302(f)(1)(A).
(d) OBBBA § 70302(f)(1)(C) provides that the election under OBBBA
§ 70302(f)(1)(A) may alternatively be implemented as a change in method of accounting
for purposes of § 481 for an eligible taxpayer's first taxable year affected by such
election and will be treated as initiated by the taxpayer for such taxable year and made
with the consent of the Secretary. The procedures in section 7.02 of Rev. Proc. 2025-
23, as modified by this revenue procedure, provide an automatic change in method of
accounting for retroactive application of § 174A by an eligible taxpayer that wants to
treat the election provided in OBBBA § 70302(f)(1)(A) as a change in method of
accounting.
(e) OBBBA § 70302(f)(1)(D) provides that an election under § 280C(c)(2), or a
revocation of a § 280C(c)(2) election, for any taxable year beginning after December 31,
2021, by an eligible taxpayer making an election under OBBBA § 70302(f)(1)(A) will not
fail to be treated as timely made (or as made on the return) if made during the 1-year

period beginning on the date of enactment of the OBBBA, which is July 4, 2025, on an
amended return for such taxable year. The 1-year period beginning on July 4, 2025,
ends on July 3, 2026. Section 7503 provides where the last day for performing an act
under the internal revenue laws falls on a Saturday, Sunday, or legal holiday, the
performance of such act will be considered timely if it is completed on the next
succeeding day that is not a Saturday, Sunday, or legal holiday. Because July 3, 2026,
is a legal holiday recognizing Independence Day, the election under OBBBA
§ 70302(f)(1)(D) must be made by the earlier of the close of the eligible taxpayer's
period of limitations on filing a claim for credit or refund under § 6511 or Monday, July 6,
2026. As previously discussed, the OBBBA did not modify, or provide an exception to
§ 6511 for purposes of the elections under OBBBA § 70302(f).
(f) Sections 4 and 5 of this revenue procedure, respectively, set forth the
procedures under which an eligible taxpayer may make a late election, or revoke an
election, under § 280C(c)(2).
.07 Changing methods of accounting under § 446(e).
(1) In general.
(a) Except as otherwise expressly provided in the Code and the regulations
thereunder, § 446(e) and § 1.446-1(e)(2) require a taxpayer to secure the consent of the
Commissioner before changing a method of accounting for Federal income tax
purposes. Section 1.446-1(e)(3)(i) provides, in part, that except as otherwise provided
under the authority of § 1.446-1(e)(3)(ii), to secure the Commissioner's consent to a
taxpayer's change in method of accounting the taxpayer generally must file a Form
3115, Application for Change in Accounting Method, with the Commissioner during the

taxable year in which the taxpayer desires to make the change in method of accounting.
Section 1.446-1(e)(3)(ii) authorizes the Commissioner to prescribe administrative
procedures under which taxpayers will be permitted to change their method of
accounting. The administrative procedures prescribe those terms and conditions
necessary to obtain the Commissioner's consent to effect the change and to prevent
amounts from being duplicated or omitted.
(b) Rev. Proc. 2015-13, 2015-5 I.R.B. 419, as clarified and modified by Rev.
Proc. 2015-33, 2015-24 I.R.B. 1067, and as modified by Rev. Proc. 2021-34, 2021-35
I.R.B. 337, Rev. Proc. 2021-26, 2021-22 I.R.B. 1163, Rev. Proc. 2017-59, 2017-48
I.R.B. 543, and section 17.02(b) and (c) of Rev. Proc. 2016-1, 2016-1 I.R.B. 1, sets forth
the general administrative procedures by which a taxpayer may obtain the automatic
consent of the Commissioner to change a method of accounting described in the List of
Automatic Changes. Rev. Proc. 2025-23 contains the current List of Automatic
Changes.
(c) A change in a taxpayer's treatment of expenditures to comply with § 174 or
§ 174A, or to make certain elections provided in OBBBA § 70302(f), is a change in
method of accounting to which §§ 446(e) and 481, and the corresponding regulations,
apply. A taxpayer that changes its method of accounting to comply with § 174 or § 174A
or to make such elections under OBBBA § 70302(f) must use the accounting method
change procedures in Rev. Proc. 2015-13 or its successor. Section 7.01 of Rev. Proc.
2025-23, as modified by this revenue procedure, allows taxpayers to obtain automatic
consent to change their method of accounting for domestic research or experimental
expenditures under TCJA § 174. Section 7.02 of Rev. Proc. 2025-23, as modified by

this revenue procedure, allows taxpayers to obtain automatic consent to (1) change
their method of accounting for domestic research or experimental expenditures to a
method of accounting under § 174A for amounts paid or incurred in taxable years
beginning after December 31, 2024, (2) in the case of eligible taxpayers, change their
method of accounting for domestic research or experimental expenditures under
OBBBA § 70302(f)(1)(C) (small business retroactive method) for amounts paid or
incurred in taxable years beginning after December 31, 2021, and before January 1,
2025, and (3) change their method of accounting for domestic research or experimental
expenditures under OBBBA § 70302(f)(2)(B) (recovery of unamortized amount method)
for amounts paid or incurred in taxable years beginning after December 31, 2021, and
before January 1, 2025. Section 7.03 of Rev. Proc. 2025-23, as modified by this
revenue procedure, allows taxpayers to obtain automatic consent to change their
method of accounting for foreign research or experimental expenditures under either
TCJA § 174 or § 174.
.08 Rules and extensions for certain tax returns.
(1) In general. Section 6081(a) permits the Secretary to grant a reasonable
extension of time, generally no more than six months, for filing any return, declaration,
statement, or other required document.
(2) P
artnership tax returns .
(a) Section 6031(a) requires every partnership to file a return for each taxable
year stating specifically the items of its gross income and the deductions allowable by
subtitle A of the Code and such other information as required by forms and regulations,
including information about the partners in the partnership. For a partnership, the return

required by § 6031 is the Form 1065, which includes Schedule K-1. Schedule K-1
provides the name of the partner and the partner's distributive share of taxable income
and other information related to the partner regarding the partnership. Section 6031(b)
requires that a partnership required to file a return under § 6031(a) furnish a copy of the
Schedule K-1 to each partner that includes such information as may be required to be
shown by regulations. In general, § 6031(b) also prohibits partnerships subject to the
centralized partnership audit procedures of the Bipartisan Budget Act of 2015 (BBA),
Public Law 114-74, 129 Stat. 584 (November 2, 2015), from amending the information
required to be furnished to their partners after the due date of the return. Rather, under
§ 6227, such partnerships may file an administrative adjustment request (AAR) in the
amount of one or more partnership-related items for any partnership taxable year.
(b) Section 6072(b) provides that the due date for filing Form 1065 and furnishing
Schedules K-1 to partners is the fifteenth day of the third month following the close of
the partnership's taxable year. For example, the due date for a calendar-year
partnership is March 15. For calendar-year partnerships that timely request a six-month
extension, the extended due date is September 15. A partnership that files its Form
1065 and furnishes Schedules K-1 to its partners prior to the due date for filing the Form
1065 (including extensions) may file a superseding Form 1065 and furnish
corresponding Schedules K-1 to its partners prior to the extended due date. See
generally Rev. Proc. 2019-32, 2019-33 I.R.B. 659.
(3) S corporation tax returns.
(a) Sections 6012(a)(2) and 6037(a) require every S corporation to file a return
for each taxable year stating specifically the items of its gross income and the

deductions allowable by subtitle A of the Code and such other information as required
by forms and regulations, including information about each shareholder in the
S corporation. For an S corporation, the return required by § 6037(a) is the Form 1120-
S, which includes Schedules K-1. Schedule K-1 provides the name of each shareholder
and the shareholder's share of the corporation's income, deductions, credits, and other
information related to the shareholder regarding the S corporation. Section 6037(b)
requires that an S corporation required to file a return under section 6037(a) furnish a
copy of the Schedule K-1 to each shareholder that includes such information as may be
required to be shown by regulations.
(b) Section 6072(b) provides that the due date for filing Form 1120-S and
furnishing Schedules K-1 to its shareholders is the fifteenth day of the third month
following the close of the S corporation's taxable year. For example, the due date for a
calendar-year S corporation is March 15. For calendar-year S corporations that timely
request a six-month extension, the extended due date is September 15. An S
corporation that files its Form 1120-S and furnishes Schedules K-1 to its shareholders
prior to the due date for filing the Form 1120-S (including extensions) may file a
superseding Form 1120-S and furnish corresponding Schedules K-1 to its shareholders
prior to the extended due date.
(4) C corporation tax returns.
(a) Section 6012(a)(2) requires every C corporation to file a return for each
taxable year stating specifically the income, gains, losses, deductions, credits, and other
information needed to figure the income tax liability of the C corporation. For a
C corporation, the return required by § 6012(a)(2) is a Form 1120 or another form in the

Form 1120 series.
(b) Section 6072(a) generally provides that the due date for filing Form 1120 is
the fifteenth day of the fourth month following the close of the C corporation's taxable
year. For example, the due date for a calendar-year C corporation is April 15. For
calendar-year C corporations that timely request a six-month extension, the extended
due date is October 15. A C corporation that files its Form 1120 prior to the due date for
filing the Form 1120 (including extensions) may file a superseding Form 1120 prior to
extended due date.

(5) Individual tax returns.
(a) Section 6012(a)(1) requires every individual having taxable year gross
income at or above certain thresholds to file a return for each taxable year stating
specifically the individual's annual taxable income, including income or loss from a
business the individual operated or a profession the individual practiced as a sole
proprietor. For an individual reporting income or loss from a business, the return
required by § 6012(a)(1) is the Form 1040 and a corresponding Schedule C. Schedule
C provides the income or loss from a business the individual operated or a profession
the individual practiced as a sole proprietor.
(b) Section 6072(a) provides that the due date for filing Form 1040 and a
corresponding Schedule C is the fifteenth day of the fourth month following the close of
the individual's taxable year. This due date is April 15. For individuals who timely
request a six-month extension, the extended due date is October 15. An individual who

2 A foreign corporation that does not have an office or place of business in the United States must file its
income tax return on or before the fifteenth day of the sixth month following the close of the foreign
corporation's taxable year. For example, the due date for a calendar-year foreign corporation is June 15.

files Form 1040 and a corresponding Schedule C prior to the due date for filing the
Form 1040 (including extensions) may file a superseding Form 1040 prior to the
extended due date.
(6) Trust and estate tax returns.
(a) Section 6012(a)(4) requires every trust to file a return for each taxable year
stating specifically the trust's income, deductions, gains, losses, and other information
needed to figure the income tax liability. Section 6012(a)(3) requires every estate with
gross income of $600 or more in a taxable year to file a return for that year. For trusts
and estates, the return required by § 6012(a)(4) is the Form 1041, which includes
Schedule K-1. Schedule K-1 provides the name of each beneficiary and the
beneficiary's share of the trust or estate's income, deductions, credits, and other
information of the trust that is related to the beneficiary regarding the trust or estate.
Section 6034A(a) requires that the fiduciary of any trust or estate required to file a return
under section 6012(a) furnish a copy of the Schedule K-1 to each beneficiary that
includes such information as may be required to be shown by regulations.
(b) Section 6072(a) provides that the due date for filing Form 1041 and furnishing
Schedules K-1 to its beneficiaries by either a trust or an estate is the fifteenth day of the
fourth month following the close of the trust or estate's taxable year. For example, the
due date for calendar-year trusts and estates is April 15. For calendar-year trusts and
estates that timely request a six-month extension, the extended due date is October 15.
A trust or an estate that files Form 1041 and furnishes Schedules K-1 to its beneficiaries
prior to the due date for filing the Form 1041 (including extensions) may file a
superseding Form 1041 and furnish corresponding Schedules K-1 to its beneficiaries

prior to the extended due date.
(7) Exempt organization business income tax returns.
(a) Sections 6012 and 1.6012-2(e) require an exempt organization that is subject
to the tax imposed by § 511(a)(1) on its unrelated business taxable income to make a
return for each taxable year if it has gross income of $1,000 or more. For these exempt
organizations, the required return is Form 990-T.
(b) Section 6072(e) provides that the due date for filing Form 990-T by an
organization exempt from taxation under § 501(a) is the fifteenth day of the fifth month
from the close of the exempt organization's taxable year. For example, the due date for
a calendar-year exempt organization is May 15. For calendar-year exempt
organizations that timely request a six-month extension, the extended due date is
November 15. An exempt organization that files Form 990-T prior to the due date for
filing the Form 990-T (including extensions) may file a superseding Form 990-T prior to
the extended due date.
(8) Section 8 of this revenue procedure. The Treasury Department and the IRS
are aware that certain partnerships, S corporations, C corporations, individuals, trusts,
estates, and exempt organizations that are eligible taxpayers under OBBBA
§ 70302(f)(1)(B) that already filed a tax return for the 2024 taxable year did not have the
opportunity to make the election contained in OBBBA § 70302(f)(1)(A), or the method
change provided in OBBBA § 70302(f)(1)(C), for such return for the 2024 taxable year.
These taxpayers may not have filed an extension and, for those subject to the BBA,
may be restricted from amending Form 1065 or Schedules K-1 under §§ 6031(b) and
6227. In order to provide an opportunity for such taxpayers to make the election

contained in OBBBA § 70302(f)(1)(A) or the accounting method change provided in
OBBBA § 70302(f)(1)(C), section 8 of this revenue procedure grants an automatic six-
month extension of time under § 6081 for eligible taxpayers to file a superseding tax
return and to furnish any corresponding Schedules K-1, as applicable, for a 2024
taxable year on or before the extended due date.
SECTION 3. SMALL BUSINESS ELECTION TO RETROACTIVELY APPLY § 174A
.01 In general.
(1) Under OBBBA § 70302(f)(1)(A), a small business taxpayer may elect to treat
OBBBA § 70302(e)(1) as providing that the amendments made by OBBBA § 70302
apply to amounts paid or incurred in taxable years beginning after December 31, 2021,
rather than December 31, 2024. For example, a small business taxpayer may elect to
apply § 174A(a) to deduct domestic research or experimental expenditures that were
(1) previously taken into account under TCJA § 174 and (2) paid or incurred in taxable
years beginning after December 31, 2021, and before January 1, 2025, in the taxable
year in which the expenditures were originally paid or incurred. Alternatively, for
example, a small business taxpayer may elect to apply § 174A(c) and charge such
expenditures to capital account in the year paid or incurred and amortize the
expenditures ratably over a period of not less than 60 months, beginning with the month
in which the taxpayer first realizes benefits from such expenditures.
(2) Under OBBBA § 70302(f)(1)(C), in lieu of using the procedure in this section 3,
a small business taxpayer may instead make a change in method of accounting under
section 7.02(3)(c) of Rev. Proc. 2025-23, as modified by this revenue procedure, to treat
the effective date of OBBBA § 70302 contained in OBBBA § 70302(e)(1) as being

applicable to amounts paid or incurred in taxable years beginning after December 31,
2021. See section 7 of this revenue procedure.
.02 Defined terms.
(1) Small business taxpayer. For purposes of this section 3, a small business
taxpayer means any taxpayer, other than a tax shelter under § 448(d)(3) and § 1.448-
2(b)(2), that meets the § 448(c) gross receipts test as provided in § 1.448-2(c) for its
first taxable year beginning after December 31, 2024. The § 448(c) gross receipts test
is met if a taxpayer has average annual gross receipts for the three prior taxable years
of $25,000,000 or less (adjusted for inflation), as described in § 1.448-2(c). For a
taxable year beginning in 2025, the inflation-adjusted amount is $31,000,000. See Rev.
Proc. 2024-40, 2024-45 I.R.B. 1100.
(2) A
pplicable taxable year. For purposes of this section 3, an applicable taxable
year is any taxable year beginning after December 31, 2021, and before January 1,
2025.
.03 S
mall business OBBBA election . An election under OBBBA § 70302(f)(1)(A) may
be made on a small business taxpayer's timely filed (including any extension) original
Federal income tax return for an applicable taxable year, or on an AAR or amended
Federal income tax return, as applicable, for an applicable taxable year, by attaching a
statement to such AAR or Federal income tax return, as provided in section 3.03(2) of
this revenue procedure (small business OBBBA election). Once an election under this
section 3.03 has been made by a small business taxpayer for an applicable taxable
year, such taxpayer must carry out the election under this section 3.03 for all applicable
taxable years in which the taxpayer paid or incurred domestic research or experimental

expenditures.
(1) Eligibility to make election. A small business taxpayer may make the election
provided in this section 3.03 if it has not made a change in method of accounting under
section 7.02(3)(c) of Rev. Proc. 2025-23, as modified by this revenue procedure.
(2) M anner of making election. A small business taxpayer makes an election under
this section 3.03 by attaching a statement to its AAR or original or amended Federal
income tax return, as applicable, for an applicable taxable year. Such a statement must
be entitled, "FILED PURSUANT TO SECTION 3.03 OF REV. PROC. 2025-28", and
must be attached to the Federal income tax return that is the AAR, or original or
amended return, as applicable, filed for each applicable taxable year, and must include:
(a) the name and taxpayer identification number of the small business taxpayer
that paid or incurred domestic research or experimental expenditures in taxable years
beginning after December 31, 2021, and before January 1, 2025;
(b) a declaration that the taxpayer is not a tax shelter for its first taxable year
beginning after December 31, 2024 (taking into account the election provided in
§ 1.448-2(b)(2)(iii)(B) if the declaration in section 3.03(2)(c) of this revenue procedure is
made);
(c) if the taxpayer has not previously made the election provided in § 1.448-
2(b)(2)(iii)(B) and the taxpayer intends to make such election for its first taxable year
beginning after December 31, 2024, a declaration that the taxpayer will make the
election provided in § 1.448-2(b)(2)(iii)(B) for purposes of determining whether it is a tax
shelter for its first taxable year beginning after December 31, 2024, on the original
Federal income tax return (including extensions) filed for such taxable year;

(d) a declaration that the taxpayer meets the § 448(c) gross receipts test, as
provided in § 448(c) and § 1.448-2(c), for its first taxable year beginning after December
31, 2024;
(e) a statement indicating whether the taxpayer is making the small business
OBBBA election to (i) deduct domestic research or experimental expenditures in the
applicable taxable year in which they are paid or incurred or (ii) charge such
expenditures to capital account and amortize such expenditures under § 174A(c);
(f) if the taxpayer is making the small business OBBBA election to charge
domestic research or experimental expenditures to capital account under § 174A(c), a
declaration that:
(i) the taxpayer is charging such expenditures to a domestic research or
experimental expenditures capital account in the applicable taxable year in which such
expenditures are paid or incurred, and amortizing such amount over a period of not less
than 60 months beginning with the month in which the taxpayer first realizes benefits
from such expenditures; and
(ii) the number of months (not less than 60) selected for the amortization
period; and
(g) a declaration that the taxpayer will file an AAR or amended return, as
applicable, to reflect the election provided in this section 3.03 for any applicable taxable
year(s) for which the taxpayer previously filed a Federal income tax return prior to
September 15, 2025, that specifies such applicable taxable years, if the taxpayer paid
or incurred domestic research or experimental expenditures in such applicable taxable
year(s).

(3) Due date for making election on an AAR or amended return.
(a) In general. For an applicable taxable year, an election under this section 3.03
made on an AAR or amended return for such applicable taxable year, or an AAR or
amended return filed to carry out an election made for another applicable taxable year
under this section 3.03, must be filed on or before July 6, 2026. As previously
discussed in section 2.06(2)(b) of this revenue procedure, small business taxpayers
with an applicable taxable year beginning in 2022 should be aware that for purposes of
OBBBA § 70302(f), § 6511, which governs the statute of limitations for credit or refund,
was not amended. Accordingly, any election under this section 3.03 made on an AAR
or amended return for such applicable taxable year, or an AAR or amended return filed
to carry out an election made for another applicable taxable year under this section
3.03, will be considered timely only if it is filed on or before the earlier of: (i) July 6,
2026, or (ii) the due date for filing a claim for credit or refund for such applicable taxable
year under § 6511 or § 301.6511(a)-1(a)(1) (the date that is three years from the time
the return was filed for the applicable taxable year beginning in 2022).
(b) E
xample 1. Taxpayer, a C corporation, timely filed a Federal income tax
return for its applicable taxable year beginning January 1, 2022, and ending December
31, 2022, on March 1, 2023. Under section 3.03(3)(a) of this revenue procedure, and
consistent with §§ 6511(a) and 6513(a), the taxpayer's due date for filing an amended
return to make an election under this section 3.03, or to carry out an election made for
another applicable taxable year under this section 3.03, for the applicable taxable year
ending December 31, 2022, is April 15, 2026.
(c) E
xample 2. Taxpayer, a C corporation, timely filed (including extensions) a

Federal income tax return for its applicable taxable year beginning January 1, 2022, and
ending December 31, 2022, on May 15, 2023. Under section 3.03(3)(a) of this revenue
procedure, and consistent with § 6511(a), the taxpayer's due date for filing an amended
return to make an election under this section 3.03, or to carry out an election made for
another applicable taxable year under this section 3.03, for the applicable taxable year
ending December 31, 2022, is May 15, 2026.
(d) Example 3. Taxpayer, a C corporation, timely filed (including extensions) a
Federal income tax return for its applicable taxable year beginning January 1, 2022, and
ending December 31, 2022, on August 25, 2023. Under section 3.03(3)(a) of this
revenue procedure, the taxpayer's due date for filing an amended return to make an
election under this section 3.03, or to carry out an election made for another applicable
taxable year under this section 3.03, for the applicable taxable year ending December
31, 2022, is July 6, 2026.
(4) D
eemed election. Solely for purposes of an original Federal income tax return
for an applicable taxable year timely filed on or before November 15, 2025, the small
business taxpayer will be deemed to have made an election under this section 3.03 for
such taxable year if it deducts the domestic research or experimental expenditures paid
or incurred during such taxable year on such original return and otherwise complies with
the requirements of this section 3.03 for all other applicable taxable years.
.04 M
ethod changes not required .
(1) A small business taxpayer that makes an election under this section 3 to deduct
domestic research or experimental expenditures in the applicable taxable year in which
such amounts are paid or incurred is not required to make a change in method of

accounting under section 7.02(3)(a) of Rev. Proc. 2025-23, as modified by this revenue
procedure, for the first taxable year beginning after December 31, 2024, if its method of
accounting for its first taxable year beginning after December 31, 2024, is the § 174A(a)
deduction method (as defined in section 7.02(2)(b) of Rev. Proc. 2025-23, as modified
by this revenue procedure). A small business taxpayer that makes an election under
this section 3 to charge domestic research or experimental expenditures to capital
account in the applicable taxable year in which such amounts are paid or incurred and
amortize such expenditures under § 174A(c) is not required to make a change in
method of accounting under section 7.02(3)(b) of Rev. Proc. 2025-23, as modified by
this revenue procedure, for the first taxable year beginning after December 31, 2024, if
its method of accounting for its first taxable year beginning after December 31, 2024, is
the § 174A(c) amortization method (as defined in section 7.02(2)(c) of Rev. Proc. 2025-
23, as modified by this revenue procedure).
(2) A small business taxpayer that makes an election under section 3.03 of this
revenue procedure is not required or permitted to make a change in method of
accounting under section 7.02(3)(c) of Rev. Proc. 2025-23, as modified by this revenue
procedure.
.05 Tax shelter determinations for prior applicable taxable years. For purposes of
determining whether a taxpayer is a tax shelter under § 448(d)(3) and § 1.448-2(b)(2)
for an applicable taxable year for which the original Federal income tax return was filed
on or before September 15, 2025, the taxpayer may disregard the election made under
section 3.03 of this revenue procedure on an AAR or amended return for such
applicable taxable year. Accordingly, whether the taxpayer is a tax shelter for such

applicable taxable year, and whether the taxpayer is eligible for the small business
taxpayer rules contained in §§ 163(j)(3), 263A(i), 448(b)(3), 460(e)(1)(B), and 471(c) for
such applicable taxable year, is unaffected by the election provided in this section 3.
SECTION 4. SMALL BUSINESS TAXPAYER ELECTION UNDER § 280C(c)(2)
.01 In general. Under OBBBA § 70302(f)(1)(D), an eligible small business taxpayer
may make a late election under § 280C(c)(2) for any prior applicable taxable year to
have the provisions of section § 280C(c)(1) not apply and instead elect to adjust the
amount of the research credit under § 41 as required under § 280C(c)(2)(B) for such
applicable taxable year (late § 280C(c)(2) election).
.02 D
efined terms .
(1) For purposes of this section 4, the terms "small business taxpayer" and
"applicable taxable year" have the same meaning as provided in section 3.02 of this
revenue procedure.
(2) Eligible small business taxpayer. For purposes of this section 4, an "eligible
small business taxpayer" means a small business taxpayer that made an election under
section 3 of this revenue procedure for an applicable taxable year or made a change in
method of accounting under section 7.02(3)(c) of Rev. Proc. 2025-23, as modified by
this revenue procedure.
.03 E
ligible small business taxpayer § 280C(c)(2) election.
(1) Eligibility to make election. An eligible small business taxpayer may make a
late § 280C(c)(2) election under this section 4.03 for any applicable taxable year for
which the taxpayer filed an original Federal income tax return for such applicable
taxable year on or before September 15, 2025 (eligible prior year). An eligible small

business taxpayer may make a late § 280C(c)(2) election for an eligible prior year,
regardless of whether it makes a late § 280C(c)(2) election for any other eligible prior
year. However, an eligible small business taxpayer may not make a late § 280C(c)(2)
election for an eligible prior year for which it previously revoked a § 280C(c)(2) election
under section 5 of this revenue procedure.
(2) Manner of making election. An eligible small business taxpayer makes a late
§ 280C(c)(2) election for an eligible prior year under the procedures provided in this
section 4.03. An election under this section 4.03 is made by following rules similar to
those contained in § 1.280C-4(a). Accordingly, a late § 280C(c)(2) election is made by:
(a) adjusting the taxpayer's research credit amount under § 41(a) or alternative
simplified credit amount under § 41(c)(4), for the eligible prior year as required under
§ 280C(c)(2)(B) on the AAR or amended Federal income tax return, as applicable, filed
for such eligible prior year, and including any and all applicable forms (including the
Form 3800, General Business Credit);
(b) adjusting the taxpayer's domestic research or experimental expenditures
otherwise taken into account as a deduction or charged to capital account under
chapter 1 of the Code to no longer reflect § 280C(c)(1), as modified by the OBBBA;
(c) attaching an amended Form 6765, Credit for Increasing Research Activities,
marked at the top "FILED PURSUANT TO SECTION 4.03 OF REV. PROC. 2025-28" to
the AAR or amended Federal income tax return, as applicable, filed for such eligible
prior year, clearly indicating on such Form 6765 the taxpayer's intent to make the
§ 280C(c)(2) election by checking the appropriate response to question A on page 1 of
such form, and/or otherwise completing the appropriate sections of the form; and

(d) to the extent not already provided elsewhere on the AAR or amended return,
as applicable, attaching a statement indicating that the taxpayer is making a late
§ 280C(c)(2) election under section 4 of Rev. Proc. 2025-28 that includes:
(i) a declaration that the taxpayer is not a tax shelter for its first taxable year
beginning after December 31, 2024 (taking into account the election provided in
§ 1.448-2(b)(2)(iii)(B) if the declaration in section 4.03(2)(c)(ii) of this revenue procedure
is made);
(ii) if the taxpayer has not previously made the election provided in § 1.448-
2(b)(2)(iii)(B) and the taxpayer intends to make such election for its first taxable year
beginning after December 31, 2024, a declaration that the taxpayer will make the
election provided in § 1.448-2(b)(2)(iii)(B) for purposes of determining whether it is a tax
shelter for its first taxable year beginning after December 31, 2024, on the original
Federal income tax return (including extensions) filed for such taxable year; and
(iii) a declaration that the taxpayer meets the § 448(c) gross receipts test, as
provided in § 448(c) and § 1.448-2(c), for its first taxable year beginning after December
31, 2024.
(3) Due date for making election on an AAR or amended return. For an eligible
prior year, a late § 280C(c)(2) election under this section 4.03 made on an AAR or
amended return for such eligible prior year must be filed on or before July 6, 2026. As
previously discussed in section 2.06(2)(b) of this revenue procedure, small business
taxpayers with an eligible prior year beginning in 2022 should be aware that, for
purposes of OBBBA § 70302(f), § 6511 was not amended. Accordingly, to be
considered timely, any election under this section 4.03 made on an AAR or amended

return for such eligible prior year should be filed on or before the earlier of: (i) July 6,
2026, or (ii) the due date for filing a claim for credit or refund for such eligible prior year
under § 6511 or § 301.6511(a)-1(a)(1) (the date that is three years from the time the
return was filed for the eligible prior year beginning in 2022). See also the examples
provided in section 3.03(3)(b)-(d) of this revenue procedure.
(4) Duration of election. A late § 280C(c)(2) election, once made for any eligible
prior year, is irrevocable for that taxable year.
SECTION 5. SMALL BUSINESS TAXPAYER REVOCATION OF § 280C(c)(2)
ELECTION
.01 In general. Under OBBBA § 70302(f)(1)(D), an eligible small business taxpayer
may revoke a prior election made under § 280C(c)(2) for any applicable taxable year.
.02 D efined terms. For purposes of this section 5, the terms "small business
taxpayer," "applicable taxable year," and "eligible small business taxpayer" have the
same meaning as provided in section 4.02 of this revenue procedure. For purposes of
this section 5, the term "eligible prior year" has the same meaning as provided in section
4.03(1) of this revenue procedure.
.03 S
mall business taxpayer revocation of a § 280C(c)(2) election .
(1) Eligibility to revoke a § 280C(c)(2) election. An eligible small business taxpayer
may revoke a § 280C(c)(2) election under this section 5.03 for any eligible prior year,
regardless of whether it revokes a § 280C(c)(2) election for any other eligible prior year.
However, an eligible small business taxpayer may not revoke a late § 280C(c)(2)
election made under section 4 of this revenue procedure for such eligible prior year.
(2) M
anner of revoking the election. An eligible small business taxpayer revokes a

§ 280C(c)(2) election for an eligible prior year under the procedures provided in this
section 5.03. An eligible small business taxpayer revokes a § 280C(c)(2) election for an
eligible prior year by:
(a) adjusting the taxpayer's research credit amount under § 41(a) or alternative
simplified credit amount under § 41(c)(4) to no longer reflect the application of
§ 280C(c)(2)(B) on the AAR or amended Federal income tax return filed for such eligible
prior year, and including any and all applicable forms (including the Form 3800, General
Business Credit);
(b) adjusting the taxpayer's domestic research or experimental expenditures
otherwise taken into account as a deduction or charged to capital account under
chapter 1 of the Code as required under § 280C(c)(1), as modified by the OBBBA;
(c) attaching an amended Form 6765, Credit for Increasing Research Activities
marked at the top "FILED PURSUANT TO SECTION 5.03 OF REV. PROC. 2025-28" to
the AAR or amended Federal income tax return filed for such eligible prior year, clearly
indicating on such Form 6765 the taxpayer's intent to revoke the § 280C(c)(2) election
by checking the appropriate response to question A on page 1 of such form, and/or
otherwise completing the appropriate sections of the form; and
(d) to the extent not already provided elsewhere on the AAR or amended return,
attaching a statement indicating that the taxpayer is revoking a prior § 280C(c)(2)
election under section 5 of Rev. Proc. 2025-28 and that includes:
(i) a declaration that the taxpayer is not a tax shelter for its first taxable year
beginning after December 31, 2024 (taking into account the election provided in
§ 1.448-2(b)(2)(iii)(B) if the declaration in section 5.03(2)(d)(ii) of this revenue procedure

is made);
(ii) if the taxpayer has not previously made the election provided in § 1.448-
2(b)(2)(iii)(B) and the taxpayer intends to make such election for its first taxable year
beginning after December 31, 2024, a declaration that the taxpayer will make the
election provided in § 1.448-2(b)(2)(iii)(B) for purposes of determining whether it is a tax
shelter for its first taxable year beginning after December 31, 2024, on the original
Federal income tax return (including extensions) filed for such taxable year; and
(iii) a declaration that the taxpayer meets the § 448(c) gross receipts test, as
provided in § 448(c) and § 1.448-2(c), for its first taxable year beginning after December
31, 2024.
(3) Due date for revoking election on an AAR or amended return. For an eligible
prior year, a revocation of a § 280C(c)(2) election under this section 5.03 made on an
AAR or amended return for such eligible prior year must be filed on or before July 6,
2026. As previously discussed in section 2.06(2)(b) of this revenue procedure, small
business taxpayers with an eligible prior year beginning in 2022 should be aware that
for purposes of OBBBA § 70302(f), § 6511 was not amended. Accordingly, to be
considered timely, a revocation of an election under this section 5.03 made on an
amended return for such eligible prior year should be filed on or before the earlier of:
(i) July 6, 2026, or (ii) the due date for filing a claim for credit or refund for such eligible
prior year under § 6511 or § 301.6511(a)-1(a)(1) (the date that is three years from the
time the return was filed for the eligible prior year beginning in 2022). See also the
examples provided in section 3.03(3)(b)-(d) of this revenue procedure.
(4) D
uration of election. Once the § 280C(c)(2) election is revoked for an eligible

prior year, an electing small business taxpayer may not make a late § 280C(c)(2)
election under section 4 of this revenue procedure for such eligible prior year.

# SECTION 6. ELECTION TO CAPITALIZE AND AMORTIZE DOMESTIC RESEARCH

OR EXPERIMENTAL EXPENDITURES UNDER § 174A(c)
.01 In general. For domestic research or experimental expenditures paid or incurred
in a taxable year beginning after December 31, 2024, a trade or business of a taxpayer
(applicant) may elect to capitalize and amortize all such expenditures paid or incurred in
the taxable year under § 174A(c), provided the applicant did not change its method of
accounting with respect to domestic research or experimental expenditures under
section 7.02(3) of Rev. Proc. 2025-23, as modified by this revenue procedure, for such
taxable year.
.02 M
anner of making election. The election of the method under § 174A(c) must be
made by the due date (including extensions) of the Federal income tax return for the
taxable year, by attaching a statement marked at the top "FILED PURSUANT TO
SECTION 6.02 OF REV. PROC. 2025-28" to the applicant's original Federal income tax
return for the first taxable year to which the election applies. The § 174A(c) method so
elected, and the amortization period selected by the applicant under § 174A(c)(1)(B),
must be adhered to in computing taxable income for the taxable year in which the
election is made and for all subsequent taxable years unless the applicant obtains the
consent of the Commissioner to change to a different method of accounting, or to a
different amortization period. The election does not apply to any domestic research or
experimental expenditures paid or incurred during any taxable year before the taxable
year for which the election in this section 6.02 is made. The election statement must

include the following information for each applicant:
(1) the name and taxpayer identification number of the applicant;
(2) the taxable year in which the election is being made;
(3) a declaration that the applicant is charging such expenditures to a research or
experimental capital account, and amortizing such amount over a period of not less than
60 months, beginning with the month in which the applicant first realizes benefits from
such expenditures, in accordance with § 174A(c); and
(4) the number of months (not less than 60) selected for the amortization period.
.03 Exception for 2025 taxable years. For a taxable year beginning after December
31, 2024, and before January 1, 2026, an applicant that makes a change in method of
accounting to the § 174A(c) amortization method under section 7.02(3)(b) of Rev. Proc.
2025-23, as modified by this revenue procedure, for such taxable year will be deemed
to have properly made the election provided in this section 6.
SECTION 7. MODIFICATION OF SECTION 7 OF REV. PROC. 2025-23
Section 7 of Rev. Proc. 2025-23 is modified to read as follows:
.01 Change for Domestic Research or Experimental Expenditures under TCJA
§ 174.
(1) Description of change.
(a) In general. This change applies to a taxpayer that wants to change its
method of accounting for domestic research or experimental expenditures paid or
incurred in taxable years beginning before January 1, 2025, to:
(i) comply with TCJA § 174; or
(ii) rely on interim guidance provided in sections 3, 4, 5, 6, or 7 of Notice 2023-

63, 2023-39 I.R.B. 919, as modified by Notice 2024-12, 2024-5 I.R.B. 616.
(b) References. Section 13206(e) of Public Law 115-97, 131 Stat. 2054 (Dec.
22, 2017), commonly known as the Tax Cuts and Jobs Act (TCJA) provides that the
amendments made by § 13206 of the TCJA apply to amounts paid or incurred in taxable
years beginning after December 31, 2021. Unless otherwise stated, references to
"TCJA § 174" in this section 7 refer to § 174 as amended by § 13206(a) of TCJA, but
prior to amendment by § 70302 of Public Law 119-21, 139 Stat. 72 (July 4, 2025),
commonly known as the One, Big, Beautiful Bill Act (OBBBA), for amounts paid or
incurred in taxable years beginning after December 31, 2024. All references in this
section 7 to "OBBBA § 70302" refer to provisions of § 70302 of the OBBBA.
(c) C
hanges included in section 7.01(1)(a) of this revenue procedure. The
changes described in section 7.01(1)(a) of this revenue procedure include, among other
changes, a change:
(i) from capitalizing domestic research or experimental expenditures that
constitute specified research or experimental (SRE) expenditures, as defined in TCJA
§ 174(b) and section 4.02(2) of Notice 2023-63, as applicable, to inventoriable property
or depreciable property and recovering such expenditures through cost of goods sold or
depreciation, respectively, to capitalizing and amortizing such expenditures under TCJA
§ 174(a) or section 3.02 of Notice 2023-63, as applicable; and
(ii) from treating a domestic research or experimental expenditure that does not
meet the definition of an SRE expenditure as an SRE expenditure subject to
capitalization and amortization under TCJA § 174(a) or section 3.02 of Notice 2023-63,
as applicable, to treating that expenditure under the appropriate provision of the Code.

(2) Inapplicability. This change described in section 7.01(1)(a) of this revenue
procedure does not apply to:
(a) a change in the treatment of acquired, leased, or licensed computer software
under Rev. Proc. 2000-50, 2000-2 C.B. 601, as modified by Rev. Proc. 2007-16, 2007-1
C.B. 358 (see section 9.01 of this revenue procedure);
(b) a change in the treatment of research or experimental expenditures under
§ 174 as in effect prior to the amendments made by § 13206(a) of the TCJA, or software
development expenditures, paid or incurred in taxable years beginning before January
1, 2022 (see section 9.01 of this revenue procedure);
(c) a change to rely on interim guidance provided in sections 8 and 9 of Notice
2023-63, as modified by Notice 2024-12, 2024-5 I.R.B. 616;
(d) a change from treating SRE expenditures paid or incurred by a taxpayer that
transfers related property (that is, property with respect to which such SRE expenditures
were paid or incurred) in a § 351 exchange as amortizable by the transferee corporation
following such exchange to treating such SRE expenditures as amortizable by the
transferor following such exchange (as such a change is not a change in method of
accounting);
(e) a change in the treatment of domestic research or experimental expenditures
paid or incurred in taxable years beginning after December 31, 2024 (see section 7.02
of this revenue procedure); or
(f) a change in the treatment of foreign research or experimental expenditures
(see section 7.03 of this revenue procedure).
(3) Manner of making change.

(a) Modified § 481(a) adjustment and cut-off.
(i) In general. Except as provided in section 7.01(3)(a)(ii) of this revenue
procedure, the change under section 7.01(1)(a) of this revenue procedure is made with
a modified § 481(a) adjustment that takes into account only expenditures paid or
incurred in taxable years beginning after December 31, 2021, and before January 1,
2025.
(ii) E
xception for negative modified § 481(a) adjustment. If a change described
in section 7.01(3)(a)(i) of this revenue procedure results in a modified § 481(a)
adjustment that is negative, the taxpayer may instead choose to implement the change
on a cut-off basis.
(b) F
orm 3115 and required statement. In completing a Form 3115, Application
for Change in Accounting Method, to make the change in method of accounting under
section 7.01(1)(a) of this revenue procedure, a taxpayer must include on an attachment
to Form 3115:
(i) a general description of the type of domestic research or experimental
expenditures included as SRE expenditures;
(ii) the taxable year(s) in which the expenditures subject to the change were
paid or incurred by the applicant; and
(iii) a declaration that provides the reason for which the applicant is changing
its method of accounting under section 7.01(1)(a) of this revenue procedure. The
declaration must also state whether the applicant is making the change on a cut-off
basis under section 7.01(3)(a)(ii) of this revenue procedure or with a modified § 481(a)
adjustment that takes into account only expenditures paid or incurred in taxable years

beginning after December 31, 2021, under section 7.01(3)(a)(i) of this revenue
procedure.
(4) Transition rule. A taxpayer that filed a Federal income tax return on or before
January 17, 2023, for a taxable year beginning after December 31, 2021, is deemed to
have complied with the § 446 method change procedures and section 7.01 of this
revenue procedure to change its method of accounting for domestic research or
experimental expenditures paid or incurred in the first taxable year beginning after
December 31, 2021, to comply with TCJA § 174 if the taxpayer:
(a) reported the amount of research or experimental expenditures that constitute
SRE expenditures paid or incurred for such taxable year on Part VI of Form 4562,
Depreciation and Amortization, filed with the Federal income tax return; and
(b) properly capitalized and amortized such SRE expenditures in accordance
with TCJA § 174 for such taxable year.
(5) Certain eligibility rules inapplicable.
(a) In general. The eligibility rules in section 5.01(1)(d) and (f) of Rev. Proc.
2015-13, 2015-5 I.R.B. 419, do not apply to a change described in section 7.01(1)(a) of
this revenue procedure made by a taxpayer for any taxable year beginning in 2023 or
2024.
(b) C
hanges made in successive taxable years. A taxpayer may make a change
described in section 7.01(1)(a) of this revenue procedure for a taxable year beginning in
2023 or 2024, regardless of whether the taxpayer made a change for the same item for
any previous taxable year beginning in 2022, 2023, or 2024.
(6) Li mited audit protection. A taxpayer does not receive audit protection under

section 8.01 of Rev. Proc. 2015-13 for the change under section 7.01(1)(a) of this
revenue procedure with respect to expenditures paid or incurred in taxable years
beginning on or before December 31, 2021. Additionally, a taxpayer does not receive
audit protection under section 8.01 of Rev. Proc. 2015-13 for a change under section
7.01(1)(a) of this revenue procedure made for any taxable year beginning in 2023, with
respect to expenditures paid or incurred in the first taxable year beginning after
December 31, 2021, if the taxpayer did not change its method of accounting under
section 7.01(1)(a) in an effort to comply with TCJA § 174 for the first taxable year
beginning after December 31, 2021. See section 8.02(2) of Rev. Proc. 2015-13.
(7) Designated automatic accounting method change number. The designated
automatic accounting method change number for a change under this section 7.01 is
"265."
(8) N
o inference relating to expenditures paid or incurred in taxable years prior to
the first taxable year in which TCJA § 174 became effective. No inference may be
drawn from section 7.01 of this revenue procedure regarding the treatment of
expenditures paid or incurred in, and changes in methods of accounting for, taxable
years prior to when TCJA § 174 was in effect, including issues relating to the application
of §§ 1.174-1, 1.174-2, 1.174-3, and 1.174-4 for taxable years prior to when TCJA § 174
was in effect.
(9) N
o ruling on method used. The consent granted under section 9 of Rev. Proc.
2015-13 for a change made under section 7.01(1)(a) of this revenue procedure is not a
determination by the Commissioner that the new method of accounting is a permissible
method of accounting, nor does it create any presumption that the new method of

accounting is a permissible method of accounting. The director will ascertain whether
the new method of accounting is a permissible method of accounting.
(10) Contact information. For further information regarding a change under this
section, contact the Office of the Associate Chief Counsel (Income Tax and Accounting),
Branch 7, at (202) 317-7005 (not a toll-free number).
.02 C
hange to a § 174A Method for Domestic Research or Experimental
Expenditures under the OBBBA, Including Certain Transition Options.
(1) Description of change. This change applies to a taxpayer that wants to make a
change in method of accounting to which this section applies for domestic research or
experimental expenditures to comply with § 174A, as added to the Code by OBBBA
§ 70302(a), and to make certain transition method changes under the OBBBA.
(2) De
finitions. For purposes of this section 7.02, the following definitions apply:
(a) Domestic research or experimental expenditures. "Domestic research or
experimental expenditures" means research or experimental expenditures paid or
incurred by the taxpayer in connection with the taxpayer's trade or business other than
such expenditures which are attributable to foreign research (within the meaning of
§ 41(d)(4)(F)).
(b) S
ection 174A(a) deduction method. The "§ 174A(a) deduction method"
means the method of accounting described in § 174A(a) that allows a deduction for any
domestic research or experimental expenditures which are paid or incurred by the
taxpayer during the taxable year. This method of accounting is only applicable to
amounts paid or incurred in taxable years beginning after December 31, 2024.
(c) S
ection 174A(c) amortization method. The "§ 174A(c) amortization method"

means the method of accounting described in § 174A(c)(1) that allows a taxpayer to
elect to charge all domestic research or experimental expenditures paid or incurred
during the taxable year to capital account and to be allowed an amortization deduction
for such expenditures ratably over a period of not less than 60 months, beginning with
the month in which the taxpayer first realizes benefits from such expenditures. This
method of accounting is only applicable to amounts paid or incurred in taxable years
beginning after December 31, 2024.
(d) Small business retroactive method. The "small business retroactive method"
means the election provided in OBBBA § 70302(f)(1)(A) that a small business taxpayer
implements by using the change in method of accounting provided under OBBBA
§ 70302(f)(1)(C) and, thus, treats OBBBA § 70302(e)(1) as providing that the
amendments made by OBBBA § 70302 apply to domestic research or experimental
expenditures paid or incurred in taxable years beginning after December 31, 2021,
rather than December 31, 2024. Accordingly, this method of accounting is applicable
only to amounts paid or incurred in taxable years beginning after December 31, 2021,
and before January 1, 2025. The small business retroactive method means either:
(i) deducting domestic research or experimental expenditures in the taxable year paid or
incurred under § 174A(a) or (ii) charging such amounts to capital account and
amortizing such amounts under § 174A(c).
(e) S
mall business taxpayer. A "small business taxpayer" means a taxpayer,
other than a tax shelter under § 448(d)(3) and § 1.448-2(b)(2), that meets the § 448(c)
and § 1.448-2(c) gross receipts test for its first taxable year beginning after December
31, 2024. The § 448(c) gross receipts test is met if a taxpayer has average annual

gross receipts for the three prior taxable years of $25,000,000 or less (adjusted for
inflation), as described in § 1.448-2(c). For a taxable year beginning in 2025, the
inflation-adjusted amount is $31,000,000. See Rev. Proc. 2024-40, 2024-45 I.R.B.
1100.
(f) Recovery of unamortized amount method. The "recovery of unamortized
amount method" means either method of accounting described in OBBBA
§ 70302(f)(2)(A) that allows a taxpayer to elect to recover the remaining unamortized
amount by either: (i) amortizing the remaining unamortized amount in full in the first
taxable year beginning after December 31, 2024, under OBBBA § 70302(f)(2)(A)(i), or
(ii) amortizing the remaining unamortized amount ratably over the 2-taxable year period
beginning with the first taxable year beginning after December 31, 2024, under OBBBA
§ 70302(f)(2)(A)(ii).
(g) R
emaining unamortized amount. The "remaining unamortized amount"
means, as of the first day of the taxpayer's first taxable year beginning after December
31, 2024, the remaining unamortized amount of domestic research or experimental
expenditures which were (i) paid or incurred in taxable years beginning after December
31, 2021, and before January 1, 2025, and (ii) charged to capital account by the
taxpayer under TCJA § 174 for such taxable years.
(3) A
pplicability . This change applies to a taxpayer that wants to:
(a) for a taxable year beginning after December 31, 2024, and before January 1,
2026, change to the § 174A(a) deduction method for domestic research or experimental
expenditures that are paid or incurred in taxable years beginning after December 31,
2024;

(b) for a taxable year beginning after December 31, 2024, and before January 1,
2026, change to the § 174A(c) amortization method for domestic research or
experimental expenditures that are paid or incurred in taxable years beginning after
December 31, 2024;
(c) in the case of a small business taxpayer, change to the small business
retroactive method for a taxable year beginning before January 1, 2025, for which an
original Federal income tax return is filed after August 28, 2025, for domestic research
or experimental expenditures that were paid or incurred in taxable years beginning after
December 31, 2021, and before January 1, 2025; or
(d) for the first taxable year beginning after December 31, 2024 (or, in the case of
a taxpayer described in section 7.02(6)(b) of this revenue procedure, for a taxable year
beginning after December 31, 2024, and before January 1, 2026), change to use the
recovery of unamortized amount method for the remaining unamortized amount.
(4) Inapplicability. This change does not apply to:
(a) a change in method of accounting for research or experimental expenditures
which are attributable to foreign research (within the meaning of § 41(d)(4)(F)) (see
section 7.03 of this revenue procedure);
(b) except as provided in section 7.02(3)(c) and (d) of this revenue procedure, a
change in method of accounting for domestic research or experimental expenditures
taken into account under TCJA § 174 and paid or incurred in a taxable year beginning
before January 1, 2025 (see section 7.01 of this revenue procedure);
(c) a late election under § 280C(c)(2), or revocation of a § 280C(c)(2) election,
under OBBBA § 70302(f)(1)(D) and section 4 or 5, as applicable, of Rev. Proc. 2025-28;

(d) a small business OBBBA election under OBBBA § 70302(f)(1)(A) and section
3 of Rev. Proc. 2025-28; or
(e) a change in method of accounting under section 7.02(3)(a) or (b) of this
revenue procedure for the first taxable year beginning after December 31, 2024, in the
case of a small business taxpayer that either (i) makes a change in method of
accounting to the small business retroactive method for a taxable year beginning before
January 1, 2025, under this section 7.02, or (ii) that makes a small business OBBBA
election under section 3 of Rev. Proc. 2025-28, if its method of accounting for domestic
research or experimental expenditures for the first taxable year beginning after
December 31, 2024, is consistent with the method of accounting used in the
immediately preceding taxable year, after taking into account either (i) the change in
method of accounting to the small business retroactive method for the immediately
preceding taxable year or (ii) the small business OBBBA election, as applicable.
(5) Manner of making change.
(a) Year of change is the first taxable year beginning after December 31, 2024, or
a taxable year beginning before January 1, 2025, in the case of a change described in
section 7.02(3)(c) of this revenue procedure.
(i) Cut-off basis. Changes under section 7.02(3)(a) and (b) of this revenue
procedure are implemented on a cut-off basis. A change under section 7.02(3)(d) of this
revenue procedure is also implemented on a cut-off basis, such that the remaining
unamortized amount continues to be amortized under the recovery of unamortized
amount method selected by the taxpayer under OBBBA § 70302(f)(2)(A).
(ii) S
tatement in lieu of a Form 3115. The requirement of § 1.446-1(e)(3)(i) to

file a Form 3115, Application for Change in Accounting Method, is waived and a
statement in lieu of a Form 3115 is authorized for a change under this section 7.02. If
the taxpayer is making the change under section 7.02(3)(d) of this revenue procedure
for the same year of change as a change under section 7.02(3)(a) or (b) of this revenue
procedure, the changes may be made on the same statement or separate statements.
Notwithstanding the definition of Form 3115 in section 3.07 of Rev. Proc. 2015-13, 2015-
5 I.R.B. 419, the statement in lieu of a Form 3115 that is permitted under this section
7.02 is considered a Form 3115 for purposes of the automatic change procedures of
Rev. Proc. 2015-13. The requirement to file the duplicate copy, under section 6.03(1)(a)
of Rev. Proc. 2015-13, is waived. The statement must include the following information
for each applicant:
(A) the name and taxpayer identification number of the applicant;
(B) the designated automatic accounting method change number for this
change (see section 7.02(12) of this revenue procedure);
(C) if the applicant is changing its method of accounting to the § 174A(a)
deduction method or the § 174A(c) amortization method, a declaration that the applicant
is changing the method of accounting for domestic research or experimental
expenditures on a cut-off basis;
(D) if the applicant is changing its method of accounting to the § 174A(a)
deduction method, a declaration that the applicant is deducting such expenditures under
the § 174A(a) deduction method beginning with the year of change;
(E) if the applicant is changing its method of accounting to the § 174A(c)
amortization method, a declaration that:

(I) the applicant is charging such expenditures to a domestic research or
experimental expenditures capital account beginning with the year of change, and
amortizing such amount over a period of not less than 60 months beginning with the
month in which the taxpayer first realizes benefits from such expenditures, in
accordance with the § 174A(c) amortization method; and
(II) the number of months (not less than 60) selected for the amortization
period;
(F) In the case of a small business taxpayer changing to the small business
retroactive method, a declaration that the applicant:
(I) is not a tax shelter for its first taxable year beginning after December 31,
2024 (taking into account the election provided in § 1.448-2(b)(2)(iii)(B) if the declaration
in section 7.02(5)(f)(II) of this revenue procedure is made);
(II) if the taxpayer has not previously made the election provided in § 1.448-
2(b)(2)(iii)(B) and the taxpayer intends to make such election for its first taxable year
beginning after December 31, 2024, a declaration that the taxpayer will make the
election provided in § 1.448-2(b)(2)(iii)(B) for purposes of determining whether it is a tax
shelter for its first taxable year beginning after December 31, 2024, on the original
Federal income tax return (including extensions) filed for such taxable year; and
(III) meets the gross receipts test, as provided in § 448(c) and § 1.448-2(c),
for its first taxable year beginning after December 31, 2024; and
(G) if the applicant is changing to a recovery of unamortized amount method:
(I) a declaration regarding whether the applicant is changing to either:
(i) amortize the remaining unamortized amount in full in the first taxable

year beginning after December 31, 2024, under OBBBA § 70302(f)(2)(A)(i); or
(ii) amortize the remaining unamortized amount ratably over the 2-taxable
year period beginning with the first taxable year beginning after December 31, 2024,
under OBBBA § 70302(f)(2)(A)(ii); and
(II) a declaration that the applicant is changing the method of accounting for
the remaining unamortized amount on a cut-off basis.
(b) Year of change is later than the first taxable year beginning after December
31, 2024.
(i) Modified § 481(a) adjustment and cut-off basis. A change under section
7.02(3)(a) of this revenue procedure for a year of change later than the first taxable year
beginning after December 31, 2024, is made with a modified § 481(a) adjustment, and
must take into account only domestic research or experimental expenditures paid or
incurred in taxable years beginning after December 31, 2024. A change under section
7.02(3)(b) of this revenue procedure for a year of change later than the first taxable year
beginning after December 31, 2024, is implemented on a cut-off basis.
(ii) S
pecial rule for short 2025 taxable years. In the case of a taxpayer
described in section 7.02(6)(b) of this revenue procedure, a change under section
7.02(3)(d) of this revenue procedure is made with a modified § 481(a) adjustment and
the remaining unamortized amount is amortized under the recovery of unamortized
amount method selected by the taxpayer under OBBBA § 70302(f)(2)(A).
(iii) S
tatement in lieu of Form 3115. The requirement of § 1.446-1(e)(3)(i) to file
a Form 3115, Application for Change in Accounting Method, is waived and a statement
in lieu of a Form 3115 is authorized for a change under this section 7.02. If the taxpayer

is making the change under 7.02(3)(d) of this revenue procedure for the same year of
change as a change under section 7.02(3)(a) or (b) of the revenue procedure, the
changes may be made on the same statement or separate statements.
Notwithstanding the definition of Form 3115 in section 3.07 of Rev. Proc. 2015-13, 2015-
5 I.R.B. 419, the statement in lieu of a Form 3115 that is permitted under this section
7.02 is considered a Form 3115 for purposes of the automatic change procedures of
Rev. Proc. 2015-13. The requirement to file the duplicate copy, under section 6.03(1)(a)
of Rev. Proc. 2015-13, is waived. The statement must include the information described
in section 7.02(5)(a)(ii) of this revenue procedure; however, in lieu of the information
described in section 7.02(5)(a)(ii)(C) of this revenue procedure, the applicant should
include a declaration that the applicant is changing the method of accounting for
domestic research or experimental expenditures with a modified § 481(a) adjustment,
and provide such modified § 481(a) adjustment.
(6) Transition rules.
(a) Change to the § 174A(a) deduction method or the § 174A(c) amortization
method. A taxpayer that filed a Federal income tax return on or before September 15,
2025, for a taxable year beginning after December 31, 2024, is deemed to have
complied with the general procedures under § 446(e), § 1.446-1(e), and this section
7.02 to change its method of accounting for domestic research or experimental
expenditures paid or incurred in taxable years beginning after December 31, 2024, to
the § 174A(a) deduction method or the § 174A(c) amortization method, as applicable, to
comply with § 174A if the taxpayer either:
(i) properly deducted such domestic research or experimental expenditures in

accordance with the § 174A(a) deduction method for such taxable year; or
(ii) reported the amount of domestic research or experimental expenditures
paid or incurred for such taxable year on Part VI of Form 4562, Depreciation and
Amortization, filed with the Federal income tax return, and properly capitalized and
amortized such domestic research or experimental expenditures in accordance with the
§ 174A(c) amortization method for such taxable year.
(b) Change to the recovery of unamortized amount method. A taxpayer that filed
a Federal income tax return on or before September 15, 2025, for a taxable year
beginning after December 31, 2024, is deemed to have complied with the general
procedures under § 446(e), § 1.446-1(e), and this section 7.02 to change its method of
accounting for the remaining unamortized amount to the recovery of unamortized
amount method, if the taxpayer either:
(i) amortized the remaining unamortized amount in full in the first taxable year
beginning after December 31, 2024; or
(ii) amortizes the remaining unamortized amount ratably over the 2-taxable
year period beginning with the first taxable year beginning after December 31, 2024.
(7) Certain eligibility rules inapplicable.
(a) In general. The eligibility rule in section 5.01(1)(d) of Rev. Proc. 2015-13,
2015-5 I.R.B. 419, does not apply to a change described in section 7.02(3) or 7.02(6) of
this revenue procedure for taxable years beginning before January 1, 2026.
(b) S pecial rule. For purposes of determining whether the eligibility rule in
section 5.01(1)(f) of Rev. Proc. 2015-13, 2015-5 I.R.B. 419, is satisfied for a change
described in section 7.02(3) or 7.02(6) of this revenue procedure, the following changes

in method of accounting are not taken into account:
(i) any change in method of accounting for domestic research or experimental
expenditures made under § 174, prior to amendment by OBBBA § 70302, for a taxable
year beginning before January 1, 2025;
(ii) a change in method of accounting described in section 7.02(6)(a) or (b) of
this revenue procedure; or
(iii) a change under section 7.02(3)(a) or (b) of this revenue procedure for the
first taxable year beginning after December 31, 2024.
(8) Limited audit protection. A taxpayer does not receive audit protection under
section 8.01 of Rev. Proc. 2015-13 for a change under this section 7.02 with respect to
expenditures paid or incurred in taxable years beginning before January 1, 2025. See
section 8.02(2) of Rev. Proc. 2015-13.
(9) S pecial rule for changes to the § 174A(c) amortization method. A change under
7.02(3)(b) of this revenue procedure for a taxable year beginning after December 31,
2024, and before January 1, 2026, will constitute an election by the taxpayer under
§ 174A(c) for the year of change for purposes of section 6 of Rev. Proc. 2025-28.
(10) N
o inference relating to expenditures paid or incurred in taxable years prior to
the first taxable year beginning before January 1, 2025. No inference may be drawn
from this section 7.02 regarding the treatment of expenditures paid or incurred in, and
changes in methods of accounting for, taxable years in which TCJA § 174 was in effect,
including issues relating to the application of Notice 2023-63, 2023-39 I.R.B. 919, as
modified by Notice 2024-12, 2024-5 I.R.B. 616.
(11) N
o ruling on method used. The consent granted under section 9 of Rev. Proc.

2015-13 for a change made under this section 7.02 is not a determination by the
Commissioner that the new method of accounting is a permissible method of
accounting, nor does it create any presumption that the new method of accounting is a
permissible method of accounting. The director will ascertain whether the new method
of accounting is a permissible method of accounting.
(12) Designated automatic accounting method change numbers. The designated
automatic accounting method change number for a change under this section 7.02 is
"273."
(13) C
ontact information. For further information regarding a change under this
section, contact the Office of the Associate Chief Counsel (Income Tax and Accounting),
Branch 7 at (202) 317-7005 (not a toll-free number).
.03 C
hange for Foreign Research or Experimental Expenditures .
(1) Description of change.
(a) In general. This change applies to a taxpayer (applicant) that wants to
change its method of accounting for foreign SRE expenditures or foreign research or
experimental expenditures, as applicable, paid or incurred in taxable years beginning
after December 31, 2021, to:
(i) comply with TCJA § 174 for expenditures paid or incurred in taxable years
beginning before January 1, 2025;
(ii) rely on interim guidance provided in sections 3, 4, 5, 6, or 7 of Notice 2023-
63, 2023-39 I.R.B. 919, as modified by Notice 2024-12, 2024-5 I.R.B. 616; or
(iii) comply with the changes made to § 174 by the OBBBA for expenditures
paid or incurred in taxable years beginning after December 31, 2024, for taxable years

beginning before January 1, 2026.
(b) Changes included in section 7.03(1)(a) of this revenue procedure. The
changes described in section 7.03(1)(a)(i) and (ii) of this revenue procedure include,
among other changes:
(i) a change from capitalizing SRE expenditures, as defined in TCJA § 174(b)
and section 4.02(2) of Notice 2023-63, as applicable, to inventoriable property or
depreciable property and recovering such expenditures through cost of goods sold or
depreciation, respectively, to capitalizing and amortizing such expenditures under TCJA
§ 174(a) or section 3.02 of Notice 2023-63, as applicable; and
(ii) from treating an expenditure that does not meet the definition of SRE
expenditures as an SRE expenditure subject to capitalization and amortization under
TCJA § 174(a) or section 3.02 of Notice 2023-63, as applicable, to treating such
expenditure under the appropriate provision of the Code.
(2) Inapplicability. This change described in section 7.03(1)(a) of this revenue
procedure does not apply to:
(a) a change in the treatment of acquired, leased, or licensed computer software
under Rev. Proc. 2000-50, 2000-2 C.B. 601, as modified by Rev. Proc. 2007-16, 2007-1
C.B. 358 (see section 9.01 of this revenue procedure);
(b) a change in the treatment of research or experimental expenditures under
§ 174, as in effect prior to the amendments made by § 13206(a) of the TCJA, or
software development expenditures, paid or incurred in taxable years beginning before
January 1, 2022 (see section 9.01 of this revenue procedure);
(c) a change to rely on interim guidance provided in sections 8 and 9 of Notice

2023-63, as modified by Notice 2024-12;
(d) a change from treating SRE expenditures paid or incurred by a taxpayer that
transfers related property (that is, property with respect to which such SRE expenditures
were paid or incurred) in a § 351 exchange as amortizable by the transferee corporation
following such exchange, to treating such SRE expenditures as amortizable by the
transferor following such exchange (as such a change is not a change in method of
accounting);
(e) a change in the treatment of domestic research or experimental expenditures
(as defined in § 174A(b)) paid or incurred in taxable years beginning after December 31,
2024, or, in the case of a small business taxpayer (as defined in section 7.02(2)(e) of
this revenue procedure), a change in the treatment of such expenditures paid or
incurred in taxable years beginning after December 31, 2021 (see section 7.02 of this
revenue procedure); or
(f) a change in the treatment of domestic research or experimental expenditures
paid or incurred in taxable years beginning after December 31, 2021, and before
January 1, 2025 (see section 7.01 of this revenue procedure).
(3) Manner of making change.
(a) Modified § 481(a) adjustment and cut-off.
(i) In general. Except as provided in section 7.03(3)(a)(ii) of this revenue
procedure, the changes under section 7.03(1)(a)(i) and (ii) of this revenue procedure
are made with a modified § 481(a) adjustment that takes into account only expenditures
paid or incurred in taxable years beginning after December 31, 2021, and before
January 1, 2025. For the first taxable year beginning after December 31, 2024, the

change under 7.03(1)(a)(iii) of this revenue procedure is made on a cut-off basis. For
all other taxable years, the change under 7.03(1)(a)(iii) of this revenue procedure is
made with a modified § 481(a) adjustment that takes into account only expenditures
paid or incurred in taxable years beginning after December 31, 2024.
(ii) Exception for negative modified § 481(a) adjustment. If a change described
in section 7.03(3)(a)(i) or (ii) of this revenue procedure for SRE expenditures under
TCJA § 174 results in a modified § 481(a) adjustment that is negative, the taxpayer may
instead choose to implement the change on a cut-off basis.
(b) F
orm 3115 and required statement. In completing a Form 3115, Application
for Change in Accounting Method, to make the change in method of accounting under
section 7.03(1)(a) of this revenue procedure, the applicant must include on an
attachment to Form 3115:
(i) a general description of the type of expenditures included as foreign SRE
expenditures or foreign research or experimental expenditures, as applicable;
(ii) the taxable year(s) in which the expenditures subject to the change were
paid or incurred by the applicant; and
(iii) a declaration that provides the reason for which the applicant is changing
its method of accounting under section 7.03(1)(a) of this revenue procedure. The
declaration must also state whether the applicant is making the change on a cut-off
basis or with a modified § 481(a) adjustment under section 7.03(3)(a) of this revenue
procedure.
(4) Transition rule. A taxpayer that filed a Federal income tax return on or before
January 17, 2023, for a taxable year beginning after December 31, 2021, is deemed to

have complied with the § 446 method change procedures and section 7.03 of this
revenue procedure to change its method of accounting for foreign research or
experimental expenditures paid or incurred in the first taxable year beginning after
December 31, 2021, to comply with TCJA § 174 if the taxpayer:
(a) reported the amount of research or experimental expenditures that constitute
SRE expenditures paid or incurred for such taxable year on Part VI of Form 4562,
Depreciation and Amortization, filed with the Federal income tax return; and
(b) properly capitalized and amortized such SRE expenditures in accordance
with TCJA § 174 for such taxable year.
(5) Certain eligibility rules inapplicable.
(a) In general. The eligibility rules in section 5.01(1)(d) and (f) of Rev. Proc.
2015-13, 2015-5 I.R.B. 419, do not apply to a change described in section 7.03(1)(a)(i)
or (ii) of this revenue procedure made by a taxpayer for any taxable year beginning in
2023 or 2024. The eligibility rules in section 5.01(1)(d) and (f) of Rev. Proc. 2015-13 do
not apply to a change described in section 7.03(1)(a)(iii) of this revenue procedure
made by a taxpayer for the first taxable year beginning after December 31, 2024.
(b) C
hanges made in successive taxable years. A taxpayer may make a change
described in section 7.03(1)(a)(i) or (ii) of this revenue procedure for a taxable year
beginning in 2023 or 2024, regardless of whether the taxpayer made a change for the
same item for any previous taxable year beginning in 2022, 2023, or 2024.
(6) Li mited audit protection. A taxpayer does not receive audit protection under
section 8.01 of Rev. Proc. 2015-13 for the change under section 7.03(1)(a)(i) or (ii) of
this revenue procedure with respect to expenditures paid or incurred in taxable years

beginning on or before December 31, 2021. Additionally, a taxpayer does not receive
audit protection under section 8.01 of Rev. Proc. 2015-13 for a change under section
7.03(1)(a)(i) or (ii) of this revenue procedure made for any taxable year beginning in
2023, with respect to expenditures paid or incurred in the first taxable year beginning
after December 31, 2021, if the taxpayer did not change its method of accounting under
section 7.01(1)(a) in an effort to comply with TCJA § 174 for the first taxable year
beginning after December 31, 2021. Finally, a taxpayer does not receive audit
protection under section 8.01 of Rev. Proc. 2015-13 for a change under section
7.03(1)(a)(iii) of this revenue procedure with respect to expenditures paid or incurred in
taxable years beginning before December 31, 2024. See section 8.02(2) of Rev. Proc.
2015-13.
(7) Designated automatic accounting method change number. The designated
automatic accounting method change number for a change under section 7.03 of this
revenue procedure is "274."
(8) N
o inference relating to expenditures paid or incurred in taxable years prior to
the first taxable year in which TCJA § 174 became effective. No inference may be
drawn from section 7.03 of this revenue procedure regarding the treatment of
expenditures paid or incurred in, and changes in methods of accounting for, taxable
years prior to when TCJA § 174 was in effect, including issues relating to the application
of §§ 1.174-1, 1.174-2, 1.174-3, and 1.174-4 for taxable years prior to when TCJA § 174
was in effect.
(9) N
o ruling on method used. The consent granted under section 9 of Rev. Proc.
2015-13 for a change made under section 7.03(1)(a)(i) or (ii) of this revenue procedure

is not a determination by the Commissioner that the new method of accounting is a
permissible method of accounting, nor does it create any presumption that the new
method of accounting is a permissible method of accounting. The director will ascertain
whether the new method of accounting is a permissible method of accounting.
(10) Contact information. For further information regarding a change under this
section, contact the Office of Associate Chief Counsel (Income Tax and Accounting),
Branch 7 at (202) 317-7005 (not a toll-free number).

# SECTION 8. RELIEF PROVIDED TO AN ELIGIBLE ENTITY

.01 Scope. The filing-and-furnishing extensions provided by section 8.02 of this
revenue procedure apply to an eligible partnership, S corporation, C corporation,
individual, trust, estate, or exempt organization described in section 8.03 of this revenue
procedure for the taxable year described in section 8.04 of this revenue procedure.
.02 Re
lief . The IRS will treat the timely filing of Form 1065, including the furnishing
of any applicable Schedules K-1, by a partnership, Form 1120-S, including the
furnishing of any applicable Schedules K-1, by an S corporation, Form 1120 (or another
form in the Form 1120 series) by a C corporation, Form 1040 by an individual, Form
1041, including the furnishing of any applicable Schedules K-1, by a trust or estate, or
Form 990-T by an exempt organization described in section 8.03 of this revenue
procedure, as a timely and appropriately filed request for a six-month extension of the
due date to file the Form 1065, Form 1120-S, Form 1120 (or another form in the Form
1120 series), Form 1040 (Schedule C), Form 1041, or Form 990-T, as applicable. An
eligible partnership, S corporation, C corporation, individual, trust, estate, or exempt
organization that timely filed a tax return (without regard to the extension of time

provided by this revenue procedure) may file a superseding tax return, as well as
furnish Schedules K-1, as applicable, before the expiration of the extended due date.
.03 Eligible entities. The filing-and-furnishing extensions provided in section 8.02 of
this revenue procedure are available only to a partnership, S corporation, C corporation,
individual, trust, estate, or exempt organization that (1) timely filed a tax return and
furnished any applicable Schedules K-1 prior to application of this revenue procedure
before September 15, 2025, (2) did not otherwise file for an extension, and (3) files a
superseding tax return and furnishes any applicable Schedules K-1 on or before the
date that is six months after the taxpayer's due date (excluding any extension) solely for
purposes of (i) making the small business OBBBA election provided in section 3 of this
revenue procedure, (ii) making the late § 280C(c)(2) election provided in section 4 of
this revenue procedure, (iii) revoking a prior § 280C(c)(2) election under section 5 of this
revenue procedure, or (iv) making a change in method of accounting described in
section 7.02(3)(c) of Rev. Proc. 2025-23, as modified by this revenue procedure.
.04 E
ligible taxable year . The filing-and-furnishing extensions provided in this
section 8 apply only to a partnership, S corporation, C corporation, individual, trust,
estate, or exempt organization taxable year beginning during 2024 that ended prior to
September 15, 2025, and for which the due date (excluding any extension) for the
return of tax for such taxable year would be before September 15, 2025.
.05 P
rocedure. To take advantage of the relief provided in this section 8, an eligible
partnership, S corporation, C corporation, individual, trust, estate, or exempt
organization must file a superseding tax return in the same manner as the original
return and write on the top of the superseding tax return "REVENUE PROCEDURE

2025-28."

# SECTION 9. EFFECT ON OTHER DOCUMENTS

This revenue procedure modifies section 7 of Rev. Proc. 2025-23.

# SECTION 10. EFFECTIVE DATE

.01 In general. Sections 3 through 6 and section 8 of this revenue procedure are
effective August 28, 2025. Sections 7.02 and 7.03 of Rev. Proc. 2025-23, as modified
by this revenue procedure, are effective for a Form 3115 filed after August 28, 2025.
Except as otherwise provided under this section 10, section 7.01 of Rev. Proc. 2025-23,
as modified by this revenue procedure, is effective for a Form 3115 filed after August 28,
2025.
.02 T
ransition rule for taxpayers that properly file the duplicate copy of Form 3115
before November 15, 2025, for a change described in section 7.01(1)(a) of Rev. Proc.
2025-23, prior to modification by this revenue procedure.
(1) In general. If, before November 15, 2025, a taxpayer properly files the
duplicate copy of a Form 3115 for a change described in section 7.01(1)(a) of Rev. Proc.
2025-23, prior to modification by this revenue procedure, the Form 3115 is not subject
to the effective date provided in section 10.01 of this revenue procedure for section 7.01
of Rev. Proc. 2025-23, as modified by this revenue procedure.
(2) F
or domestic research or experimental expenditures, option to implement
change as described in section 7.01 of Rev. Proc. 2025-23, as modified by this revenue
procedure. If, before September 15, 2025, a taxpayer properly files the duplicate copy
of a Form 3115 for a change in method of accounting described in section 7.01(1)(a) of
Rev. Proc. 2025-23, prior to modification by this revenue procedure, that continues to be

eligible for the automatic change procedures under section 7.01(1)(a) of Rev. Proc.
2025-23, as modified by this revenue procedure, but has not filed its timely filed
(including extensions) original Federal income tax return for the year of change
implementing the change, the taxpayer may choose to implement the change as
described in either (1) section 7.01(1)(a) of Rev. Proc. 2025-23, prior to modification by
this revenue procedure, or (2) section 7.01(1)(a) of Rev. Proc. 2025-23, as modified by
this revenue procedure, but not both.
(3) For foreign research or experimental expenditures, option to implement change
as described in section 7.03 of Rev. Proc. 2025-23, as modified by this revenue
procedure. If, before September 15, 2025, a taxpayer properly files the duplicate copy
of a Form 3115 for a change in method of accounting described in section 7.01(1)(a) of
Rev. Proc. 2025-23, prior to modification by this revenue procedure, that continues to be
eligible for the automatic change procedures under section 7.03 of Rev. Proc. 2025-23,
as modified by this revenue procedure, but has not filed its timely filed (including
extensions) original Federal income tax return for the year of change implementing the
change, the taxpayer may choose to implement the change as described in either
(1) section 7.01(1)(a) of Rev. Proc. 2025-23, prior to modification by this revenue
procedure, or (2) section 7.03 of Rev. Proc. 2025-23, as modified by this revenue
procedure, but not both.

# SECTION 11. PAPERWORK REDUCTION ACT

The Paperwork Reduction Act of 1995 (44 U.S.C. §§ 3501-3520) (PRA) generally
requires that a Federal agency obtain the approval of the Office of Management and
Budget (OMB) before collecting information from the public, whether such collection of

information is mandatory, voluntary, or required to obtain or retain a benefit. An agency
may not conduct or sponsor, and a person is not required to respond to, a collection of
information unless it displays a valid control number assigned by the Office of
Management and Budget.
The collections of information in this revenue procedure are in sections 3, 4, 5, 6, 7
and 8. This information is necessary and will be used to determine whether the
taxpayer properly changed to a permitted method of accounting, properly made small
business elections under OBBBA § 70302(f)(1), properly elected to capitalize and
amortize its domestic research or experimental expenditures under § 174A(c), or
properly elected to deduct certain unamortized amounts under OBBBA § 70302(f)(2).
The collection of information is required for the taxpayer to obtain consent to change its
method of accounting or make elections under OBBBA § 70302(f).
These collection requirements are included in the OMB Control Number 1545-0074
for individual filers, 1545-0123 for business filers, 1545-0092 for trust and estate filers,
and 1545-0047 for tax-exempt filers, in accordance with the PRA (44 U.S.C. § 3507).

# SECTION 12. DRAFTING INFORMATION

The principal author of this revenue procedure are personnel from the Office of
Associate Chief Counsel (Income Tax & Accounting). For further information regarding
this revenue procedure, please contact the Office of the Associate Chief Counsel
(Income Tax and Accounting), Branch 7 at (202) 317-7005 (not a toll-free number).