Page 121

139 STAT. 191 PUBLIC LAW 119–21—JULY 4, 2025 all subsequent taxable years unless, with the approval of the Secretary, a change to a different method (or to a different period) is authorized with respect to part or all of such expendi- tures. The election shall not apply to any expenditure paid or incurred during any taxable year before the taxable year for which the taxpayer makes the election. ‘‘(d) SPECIAL RULES.— ‘‘(1) LAND AND OTHER PROPERTY.—This section shall not apply to any expenditure for the acquisition or improvement of land, or for the acquisition or improvement of property to be used in connection with the research or experimentation and of a character which is subject to the allowance under section 167 (relating to allowance for depreciation, etc.) or sec- tion 611 (relating to allowance for depletion); but for purposes of this section allowances under section 167, and allowances under section 611, shall be considered as expenditures. ‘‘(2) EXPLORATION EXPENDITURES.—This section shall not apply to any expenditure paid or incurred for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral (including oil and gas). ‘‘(3) SOFTWARE DEVELOPMENT.—For purposes of this sec- tion, any amount paid or incurred in connection with the development of any software shall be treated as a research or experimental expenditure.’’. (b) COORDINATION WITH CERTAIN OTHER PROVISIONS.— (1) FOREIGN RESEARCH EXPENSES.—Section 174 is amended— (A) in subsection (a)— (i) by striking ‘‘a taxpayer’s specified research or experimental expenditures’’ and inserting ‘‘a taxpayer’s foreign research or experimental expenditures’’, and (ii) by striking ‘‘over the 5-year period (15-year period in the case of any specified research or experi- mental expenditures which are attributable to foreign research (within the meaning of section 41(d)(4)(F)))’’ in paragraph (2)(B) and inserting ‘‘over the 15-year period’’, (B) in subsection (b)— (i) by striking ‘‘specified research’’ and inserting ‘‘foreign research’’, (ii) by inserting ‘‘and which are attributable to foreign research (within the meaning of section 41(d)(4)(F))’’ before the period at the end, and (iii) by striking ‘‘SPECIFIED’’ in the heading thereof and inserting ‘‘FOREIGN’’, and (C) in subsection (d)— (i) by striking ‘‘specified research or experimental expenditures’’ and inserting ‘‘foreign research or experi- mental expenditures’’, and (ii) by inserting ‘‘or reduction to amount realized’’ after ‘‘no deduction’’. (2) RESEARCH CREDIT.— (A) Section 41(d)(1)(A) is amended to read as follows: ‘‘(A) with respect to which expenditures are treated as domestic research or experimental expenditures under section 174A,’’. (B) Section 280C(c)(1) is amended to read as follows: