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> But it's the same ambiguity, isn't it? Essentially whether "shall" creates an obligation for the taxpayer to claim it as R&D expense or an obligation for the IRS to accept it as R&D expense if the taxpayer so claims it, the equivalent of whether "shall" applies to the employee or the employer.

What? No. How are you reading "the taxpayer shall do X" to mean "the IRS must do X"?

The text is incredibly straightforward: https://www.law.cornell.edu/uscode/text/26/174

> (1) except as provided in paragraph (2), no deduction shall be allowed for such expenditures, and

> (2) the taxpayer shall—

> (A) charge such expenditures to capital account, and

> (B) be allowed an amortization deduction of such expenditures ratably over the 5-year period [...]

PaulDavisThe1st
The crux here is: what are "the purposes of this section" ?

Does it

(a) define the rules and conditions under which a taxpayer may claim a deduction on R&D expenditure

or

(b) define the obligations of the taxpayer with respect to anything that Sec 174 defines as R&D expenditure (i.e. you must report it as such, charge it to a capital account, claim an amortization deduction)

AFAIK, nothing the IRS or Congress has said thus far has clarified this.

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