What is section 174?

Section 174^[1] refers to a provision in the tax code that allows businesses to deduct or amortize certain^[1] research and development (R&D) costs. It applies to all taxpaying entities, including corporations, small businesses, startups, and sole proprietorships. Qualifying expenses include salaries, supplies, patent costs, overhead expenses, and contract research expenses. However, not all R&D expenses are deductible under Section 174^[1], and it's important to determine conformity to this provision at the state level.