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INTERNAL REVENUE CODE OF 1954
zine, or other periodical shall be allowed as a deduction; except that the deduction shall not be allowed with respect to the portion of such expenditures as, under regulations prescribed by the Secretary or his delegate, is chargeable to capital account if the taxpayer elects, in accordance with such regulations, to treat such portion as so chargeable. Such election, if made, must be for the total amount of such portion of the expenditures which is so chargeable to capital account, and shall be binding for all subsequent taxable years unless, upon application by the taxpayer, the Secretary or his delegate permits a revocation of such election subject to such conditions as he deems necessary. SEC. 174. RESEARCH AND EXPERIMENTAL EXPENDITURES. (a) TREATMENT A S E X P E N S E S. —
(1) IN GENERAL.—A taxpayer may treat research or experimental expenditures which are paid or incurred by him during the taxable year in connection with his trade or business as expenses which are not chargeable to capital account. The expenditures so treated shall be allowed as a deduction. (2) W H E N METHOD MAY BE ADOPTED.— (A) W I T H O U T CONSENT,—A taxpayer
may, without the consent of the Secretary or his delegate, adopt the method provided in this subsection for his first taxable year— (i) which begins after December 31, 1953, and ends after the date on which this title is enacted, and (ii) for which expenditures described in paragraph (1) are paid or incurred. (B) W I T H CONSENT.—A taxpayer may, with the consent of the Secretary or his delegate, adopt at any time the method provided in this subsection. (3) SCOPE.—The method adopted under this subsection shall apply to all expenditures described in paragraph (1). The method adopted shall be adhered to in computing taxable income for the taxable year and for all subsequent taxable years unless, with the approval of the Secretary or his delegate, a change to a different method is authorized with respect to part or all of such expenditures. (b) AMORTIZATION OF CERTAIN KESEARCH EXPENDITURES.—
AND EXPERIMENTAL
(1) IN GENERAL.—At the election of the taxpayer, made in accordance with regulations prescribed by the Secretary or his delegate, research or experimental expenditures which are— (A) paid or incurred by the taxpayer in connection with his trade or business, (B) not treated as expenses under subsection (a), and (C) chargeable to capital account b u t not chargeable to property of a character which is subject to the allowance under section 167 (relating to allowance for depreciation, etc.) or section 611 (relating to allowance for depletion), may be treated as deferred expenses. In computing taxable income, such deferred expenses shall be allowed as a deduction ratably over such period of not less than 60 months as may be selected by the taxpayer (beginning with the month in which the taxpayer first realizes benefits from such expenditures). Such deferred expenses § 173
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