The Internal Revenue Service will propose new regulations this year to relax requirements for deduction and capitalization of costs related to intangible assets.

These costs, the point of frequent contention between the IRS and taxpayers, might include such expenses as spending for package design or employee compensation for activities connected with intangible assets.

Proposed changes under section 263(a) of the Internal Revenue Code will exempt regular and recurring costs. These would include salaries and fixed overhead, such as rent, utilities, and depreciation. Other provisions would exempt from capitalization intangible assets with a short life span and a defined class of minor acquisitions. Rules for defined actions, such as prepayments, would also be specified.