The IRS has issued helpful guidance (Rev. Proc. 2025-8) extending the scope of the automatic method change procedures for the treatment of specified research or experimental (SRE) expenditures to taxable years beginning in 2024. The favorable procedures expand previously issued guidance under Rev. Proc. 2024-34 (see our prior story).
Rev. Proc. 2025-8 modifies procedures in Section 7.01 of Rev. Proc. 2024-23 by expanding certain taxpayer-favorable automatic consent rules to apply to any taxable year beginning in 2024. Under prior guidance, these rules were only applicable for a taxpayer’s taxable year beginning in 2022 or 2023.
The new procedures:
- Extend the waiver of the eligibility rules in Sections 5.01(1)(d) and (f) of Rev. Proc. 2015-13 to taxable years beginning in 2024
- Provide that taxpayers may make a change in successive taxable years beginning in 2022, 2023, or 2024 for the same item
The new procedures provide transition rules for taxpayers to convert Section 174 method changes filed under the non-automatic procedures.
The new procedures are effective for Forms 3115 filed on or after Dec. 17, 2024.
Grant Thornton Insight
Rev. Proc. 2025-8 follows the IRS’s recent trend of providing taxpayers with administrative relief to comply with Section 174 by permitting taxpayers to file an automatic method change for SRE expenditures for taxable years beginning in 2024. Due to the absence of Section 174 technical guidance, uncertainty remains for taxpayers as they attempt to comply with the capitalization and amortization requirements. The ability to file 2024 method changes under the automatic procedures provides taxpayers the ability to reexamine their present Section 174 accounting methods.
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