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.
