A tax code change affecting how companies account for research and development (R&D) costs is causing significant financial strain for businesses of all sizes. Under a provision of the 2017 Tax Cuts and Jobs Act, R&D expenses must now be amortized over several years, leading to higher immediate tax costs.

Large public companies, like Lockheed Martin and Northrop Grumman, anticipate substantial increases in their tax liabilities due to this law. Small and medium-sized businesses face even greater challenges, as they lack the resources to easily cover these tax bills. Business owners have been urging lawmakers to reverse the law, but a consensus on how to do so has not been reached. Many hoped Congress would amend the law before it took effect, but it remains unchanged.

As a result, companies are now grappling with significant tax payments, causing some to dip into personal savings or consider layoffs. This tax code change is not only impacting immediate cash flow but also potentially hindering investment in critical R&D activities.

https://www.wsj.com/articles/the-tax-rule-change-that-is-threatening-businesses-survival-a9236658?mod=business_feat3_c-suite_pos3