After months of waiting, the Senate had a procedural vote yesterday, Thursday, August 1st, to seek to limit debate on modifications to the House version of the bill but failed to receive the required 60 Senate votes. As a procedural matter, Senate Majority Leader Schumer reportedly changed his vote from yes to no so that he would have the ability to bring the bill up for a vote at a later time.
The bipartisan House bill aimed to provide tax relief to both businesses and families, with one provision seeking the removal of the R&D capitalization requirement that went into effect at the beginning of 2022. The capitalization requirement has created a tax burden on businesses that invest heavily in research and development activities, many of which may be start-ups. Amongst other benefits to businesses and families, the bill would have reinstated 100% bonus depreciation as well as enhanced the child tax credit.
As a result of the vote yesterday, capital- and/or research-intensive companies should:
- Continue Capitalizing R&D Costs: As the current law mandates, companies must continue capitalizing R&D costs over five years, which could affect their cash flow and financial planning if they were relying on this bill to pass.
- Monitor Legislative Developments: Companies should stay informed about any future legislative developments as support for these tax relief provisions continues.
It’s important for companies to work closely with tax professionals to understand the full implications of the current tax laws and to develop policies that will allow them to continue their business operations effectively. Contact your GBQ tax advisor for more information on how we can help you plan your business for the future.
