By Jennifer J. Troyer, JD, Checkpoint News
The Connecticut Department of Revenue Services has issued guidance discussing the state’s conformity to the federal research and experimental expenditures under IRC § 174 and IRC § 174A for corporation business tax purposes. Recent legislation specifically decoupled Connecticut’s conformity to IRC § 174 by providing that for income years beginning on or after January 1, 2022, and before January 1, 2026, any research or experimental expenditures paid or incurred for those income years must be deducted as permitted under IRC § 174, as in effect on July 3, 2025. The same legislation delayed Connecticut’s conformity to IRC § 174A by one year by providing that for income years beginning on or after January 1, 2025, and before January 1, 2026, the deduction under IRC § 174A is disallowed.
Thus, for income years beginning on or after January 1, 2026, qualifying research or experimental expenditures incurred are treated consistently with IRC § 174A. However, corporations that claimed a subtraction modification under IRC § 174 as it existed on July 3, 2025, in an income year before January 1, 2026, may continue to claim the deduction to the extent allowable in an income year that begins on and after January 1, 2026. In these circumstances, the corporation must prepare and maintain Connecticut-specific amortization schedules relative to the research and experimental expenditures until the associated deductions are fully recovered. (Taxpayer Services Special Bulletin, TSSB 2026-2, 07/02/2026.)
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