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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.

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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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