79 Cents on the Dollar or Full Credit Plus a Tax Bill. Pick One by July 6.

Your CPA is excited about that retroactive R&D deduction. Ask them about the invoice stapled to the back of it.

Here's the setup. Section 280C of the tax code says you can't double-dip. If you claim an R&D credit, you have to give something back. Either reduce your deduction by the credit amount. Or take a smaller credit. Pick one.

But when the Tax Cuts and Jobs Act forced companies to capitalize R&D costs starting in 2022, something odd happened.

Before 2022, you spent $100,000 on R&D and wrote the whole thing off that year. One check, one deduction, done. After 2022, same $100,000, but the IRS made you spread it out. You could only write off a slice each year, like paying yourself back in installments over five years. That's what "capitalize" means here.

That spreading created a gap. The R&D credit you claimed was almost always smaller than your annual write-off slice. And 280C only clawed back the credit when it exceeded the deduction. Credit smaller than the deduction? No clawback. The credit slipped through a gap in the fence.

Forvis Mazars ran the math on a company with a $700,000 research credit and a $1 million annual deduction slice. The credit didn't exceed the deduction. Result: $147,000 in permanent tax savings that didn't exist before 2022.

That was the quiet loophole. Nobody talked about it. It just sat there. Paying out.

Then came the One Big Beautiful Bill Act. The new law says small businesses can retroactively expense their R&D costs for 2022 through 2024. No more spreading it over five years. Write the whole thing off in the year you spent it.

Big deduction. Big refund. Every CPA in the country is filing amended returns right now.

Sounds like free money. I mean, it kind of is. Except. 

Here's what accounting firm Grant Thornton found. The section numbers are tax plumbing. Read past them. The last line is the one that matters:

Translation: you opt into the big deduction. And the old 280C penalty comes back with it.

Accounting firm Plante Moran says it plain:

Right. Before 2017, you always had to choose. Full credit, but you add that credit back to your taxable income. Or a reduced credit with the full deduction. The gap in the fence is gone.

That $147,000 in free savings? Gone with it.

So now you're staring at two levers.

Lever one: keep the full credit. You get every dollar of R&D credit. But you add that credit amount back to your taxable income. Your tax bill goes up. You're paying income tax on cash the credit was supposed to shelter.

Lever two: keep the full deduction. Your deduction stays fat. But your credit gets a haircut, 79 cents on the dollar at the 21% corporate rate. You leave 21% of your credit on the table.

Lever one costs you on the deduction side. Lever two costs you on the credit side. Neither is free. Both cost you something you used to get for nothing. And the election is irrevocable.

Look. The refund from expensing might still win. It probably does for most people. But your CPA needs to model both sides. The deduction and the credit clawback. If they're showing you the refund but not the 280C cost? They're reading page one and skipping page two.

For 2022, the window is shut. The three-year statute of limitations closed on April 15, 2026. Too late.

For 2023 and 2024, the hard cutoff is July 6, 2026. Inside that window, you can make a late 280C election on the amended return. That's something normally not allowed after the original filing. Congress wrote the exception into the new law. It closes July 6 and does not reopen.

The refund is real. So is the bill stapled to the back of it.

The code wrote a loophole in 2017. The loophole paid out for three years. Now the code offers a bigger benefit that kills the old one. One provision gives. Another provision takes. That's how it works.

I dunno. Maybe worth having your CPA model both pages before July 6.