are patent infringement costs deductible
The costs of obtaining a patent, including attorneys’ fees paid or incurred in making and perfecting a patent application, are research and experimental costs. However, costs paid or incurred to obtain another’s patent are not research and experimental costs. IF you. . . THEN. . . Elect to deduct research and experimental costs as a current business expense. Deduct all research and experimental costs in the first year you pay or incur the costs and all later years. Rather than amortize these costs or deduct them as a current expense, you have the option of deducting (writing off) research and experimental costs ratably over a 10-year period beginning with the tax year in which you incurred the costs. If you are engaged in a trade or business, then the costs you incur for attorney fees to obtain a patent may be deductible in the year they are incurred if the taxpayer adopts the method allowing such deductions. Consult your accountant to see if you can qualify. IRS Regulations. Attorneys' fees expended in making and perfecting a patent application may be deductible as research or experimental expenditures under section 174 of the Internal Revenue Code, according to IRS regulation 26 CFR 1.174-2. Although it may not seem like an R&E expense, the cost of obtaining a patent is also currently deductible under Section 174. This includes both attorney fees and patent filing fees. This is one of the largest expenses many independent inventors have. Indeed, once your invention is perfected, you’ll likely have no more R&E expenses deductible under Section 174 (but you may deduct the cost of obtaining a patent as mentioned above). However, these non-R&E expenses may be currently deductible as ordinary and necessary business expenses. However, you can elect to deduct these costs as a current business expense. Your election to deduct these costs is binding for the year it is made and for all later years unless you get IRS approval to make a change. If you meet certain requirements, you may elect to defer and amortize research and experimental costs. Do not deduct research and experimental costs as a current business expense. If you meet the requirements, amortize them over at least 60 months, starting with the month you first receive an economic benefit from the research. See Research and Experimental Costs in chapter 8. There is no dollar limit on the amount of Section 174 deductions you can take each year, but your deductions must be reasonable in amount. “Reasonable” means that the amount you spend for R&E must be about what would ordinarily be paid for similar expenses by similar types of businesses. IRS Regulations. Attorneys' fees expended in making and perfecting a patent application may be deductible as  research or experimental expenditures  under section 174 of the Internal Revenue Code, according to IRS regulation 26 CFR 1.174-2.
Yes