Title II — TAX ON INCOME
The expenditures so treated shall be allowed as deduction during the
taxable year when paid or incurred.
(2) Amortization of Certain Research and Development Expenditures.
— At the election of the taxpayer and in accordance with the rules
and regulations to be prescribed by the Secretary of Finance, upon
recommendation of the Commissioner, the following research and
development expenditures may be treated as deferred expenses:
(a) Paid or incurred by the taxpayer in connection with his trade,
business or profession;
(b) Not treated as expenses under paragraph (1) hereof; and
(c) Chargeable to capital account but not chargeable to property of
a character which is subject to depreciation or depletion.
In computing taxable income, such deferred expenses shall be
allowed as deduction ratably distributed over a period of not less
than sixty (60) months as may be elected by the taxpayer (beginning
with the month in which the taxpayer first realizes benefits from
such expenditures).
The election provided by paragraph (2) hereof may be made for any
taxable year beginning after the effectivity of this Code, but only if
made not later than the time prescribed by law for filing the return
for such taxable year. The method so elected, and the period selected
by the taxpayer, shall be adhered to in computing taxable income for
the taxable year for which the election is made and for all subsequent
taxable years unless, with the approval of the Commissioner, a
change to a different method is authorized with respect to a part
or all of such expenditures. The election shall not apply to any
expenditure paid or incurred during any taxable year prior to the
taxable year for which the taxpayer makes the election.
(3) Limitations on Deduction. — This Subsection shall not apply to:
(a) Any expenditure for the acquisition or improvement of land, or
for the improvement of property to be used in connection with
research and development of a character which is subject to
depreciation and depletion; and
(b) 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 or gas.
(J)
Pension Trusts. — An employer establishing or maintaining a pension
trust to provide for the payment of reasonable pensions to his employees
National Internal Revenue Code of 1997 (as amended by the TRAIN Law, RAs 11256, 11346 and 11467)
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