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> (a)(2)(B) be allowed an amortization deduction of such expenditures ratably over the 5-year period

I’m not familiar with this tax law, why would the “be allowed” verbiage here not mean it’s an election the taxpayer could choose to apply to their situation rather than a mandate as the OP is presenting it?

i.e. software development is always an R&E expenditure but you are only “allowed” (not “required”) to amortize it.

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The problem is the one above that at the start of the section:

(1) except as provided in paragraph (2), no deduction shall be allowed for such expenditures, and

What that means is, you can't take it as a normal business expense deduction, except by following (2) which is to amortize it.

The question is who gets to decide that a given expenditure is an R&E expenditure. The way the law is written (even with the TCJA amendment) sounds to me as if the taxpayer makes this determination. Why would a taxpayer make such a determination? Presumably for the R&D credit.

I still do not see any clear indication that a taxpayer is required to consider any expenditures as R&E expenditures, though the new clause about software is ... troubling.

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