09/10/2026
For taxpayers correcting domestic research expenditures under Section 174 on their 2025 tax return, Revenue Procedure 2026-32 may affect how they handle the 2022 through 2024 tax years. On September 4, the Internal Revenue Service (IRS) issued Revenue Procedure 2026-32.
As a reminder, the TCJA required taxpayers to amortize domestic research expenditures over five years for 2022 through 2024. The OBBBA restored full domestic research expensing beginning in 2025 and allows taxpayers to recover the remaining unamortized 2022–2024 expenditures in the first year after 2024, or ratably over two years.
For taxpayers who instead deducted those expenditures in full on the original 2022 through 2024 returns, a separate method correction is needed, typically producing a positive 481(a) adjustment spread over four years. Combined with the acceleration provision, this can create a mismatch—a large upfront deduction, with income adjustments trailing over the next two to three years.
Revenue Procedure 2026-32 closes that gap for taxpayers making both changes by requiring the same period for the accelerated deduction and the positive 481(a) adjustment:
A 1-year acceleration requires the full 481(a) adjustment in that same year
A 2-year acceleration spreads the 481(a) adjustment over those same two years
Taxpayers who skip the catch-up option keep the standard four-year 481(a) period
The new rules generally apply to Forms 3115 filed after September 4, 2026. Still, transition relief allows a taxpayer that hasn't yet filed its 2025 return to keep applying prior guidance (four-year 481(a) period with a one-year acceleration) by filing its duplicate Form 3115 by November 15, 2026. For taxpayers, this deadline does not extend the 2025 filing deadline itself.
With September 15 approaching for many extended returns, please reach out to discuss how this guidance may affect your clients' 2025 filings and to review existing accounting methods, OBBBA catch-up elections, and any Forms 3115 in process.
