The Leap to Quantum: Unleashing the Power to Unlock the Opportunities

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While the concepts of quantum have been developed since the 1920s (think physicists Bohr, Heisenberg and Schrödinger), quantum technology is the newest derivative belonging to, and resulting from, the unique advancements of our century. The United Nations has even proclaimed 2025 to be the International Year of Quantum Science and Technology.

With global investment from both governments and the private sector now dramatically increasing, quantum is clearly not a short-term fad or brief blip on the tech radar screen — but demonstrates the direction in which the world is definitively moving.

If your company has not yet explored quantum computing, it’s time to learn how this emerging technology can reshape and evolve your business. And as you focus on implementing these powerful tools, we can help you think through and manage the significant financial, accounting and tax complexities that quantum technologies will present.

This article unpacks both the opportunities and challenges your business will likely face when navigating the quantum economy. We provide a quick industry overview and timeline, highlight some of the new quantum business strategies that we are now seeing, define the risks specific to implementing quantum technologies and, lastly, outline some key accounting and tax considerations as you move your business forward and unleash the power of quantum.

The Quantum Industry: Where It’s Been, Where it’s Going

Before delving into the business strategies, risks and tax implications of quantum technologies, we think it helpful to first provide an overview and timeline of the industry as context:

• In 2018, the United States (U.S.) signed into law the National Quantum Initiative (NQI) Act.
• It is estimated by The Quantum Insider that $10 billion of private capital investment will occur from 2018 through 2024, with commercial/business entities focusing on quantum: hardware components, software, communication and security, sensing and imaging and other similar focus areas of quantum computing.
• In its 2024 report, Quantum Economy Blueprint, the World Economic Forum reported that over $40 billion in global public sector investments in quantum technologies has been committed, including $3.8 billion from the U.S. as part of its NQI Act.
  • The report also highlighted the need to “assist regions and countries in initiating, developing, supporting and commercializing their quantum technology initiatives in this new quantum economy.”
• The World Economic Forum also estimated that, by 2035, quantum computing will add up to $2 trillion in economic value, with the chemical, life science, financial and mobility industries adopting and benefitting first.
• According to the McKinsey Quantum Technology Monitor, the total market size for key quantum technologies could reach an estimated $173 billion by 2040, a rapid trajectory.

Quantum Strategies and Commercialization

While it’s important to keep in mind that the market-growth numbers are only estimates and the quantum industry is relatively early-stage, we are still seeing more and more actual use cases with this technology across sectors and business structures. 

As you might expect, there are several start-ups and emerging growth, publicly-traded businesses now focused on quantum technology. But we are also seeing well-established companies that have now launched quantum operations. Some examples of the quantum business strategies now being pursued include:

• Focusing on designing and developing specific types of quantum technology architecture.
• Attracting and retaining talent with specialized quantum skills to move quantum strategies forward.
• Enabling an as-a-service cloud delivery model and emergence of quantum computing as a service (QCaaS).

Types of quantum technology architecture that we see in addition to classical computers in use today, include the following quantum computers:

• Trapped-ion
• Superconducting
• Photonic
• Annealing

Quantum Business Risks

Businesses in this industry face the types of risk typical for emerging growth companies, including concerns about ongoing losses, the ability to secure future capital, effective growth management, and talent attraction and retention. While there is great promise, there is also notable financial and operational risk:

• Continued research and development (R&D) capital deployment, with modest revenue growth, expected to lead to continued losses for the foreseeable future.
• Uncertainty about reaching broad quantum advantage.
• Intellectual property licensing and protection.
• Continued ability to attract and retain talent.
• Intensifying global competition.
• Challenges in effectively managing growth.

Key Quantum Accounting and Tax Considerations

There are also some key accounting and tax issues to be mindful of if you are a business operating in the quantum-technology space. To help you wrap your arms around this landscape, we reference the Accounting Standards Codification (ASC) Topics and Internal Revenue Code (IRC) Sections that guide us, as well as highlight their implications:   

• ASC Topic 730 – R&D Costs: It is important to be mindful of which costs may qualify as R&D. Quantum computers may require ongoing adjustment costs to continue being useful. And some technology and service costs may be incurred to support quantum systems without probable future economic benefit or alternate future use.
  
  
• ASC Topic 606 – Revenue Recognition: It may be challenging to identify distinct performance obligations and to determine transaction prices.
  
  
• ASC Subtopic 350-40 – Capitalization of Internal-Use Software Development Costs: Rigorous documentation and sound judgment are required to apportion costs among capitalizable and non-capitalizable costs and amortize accordingly. Such matching of costs with revenues is particularly relevant for emerging growth companies interested in showcasing financial stability and growth potential.
  
  
• ASC Topic 360 – Property, Plant and Equipment (PP&E): Be mindful to separate quantum category of PP&E, as needed.
  
  
• ASC Topic 718 – Share-Based Compensation: This form of compensation may be key in attracting and retaining staff and, in some instances, incentivizing collaborations with universities and others.
  
  
• ASC Topic 205-40 – Going Concern: Consider expectations for continued losses and uncertainty of raising sufficient capital to continue to operate for the 12 months following financial statement issuance. This may result in substantial doubt and require a going-concern disclosure.
  
  
• ASC Topic 740 and IRC Section 382 – Company Use of Deferred Tax Assets (DTA) : It may be necessary to maintain significant or full valuation allowances for the DTA during the early-revenue or pre-revenue phase of a quantum business for financial reporting purposes, if it is more than 50% probable that some or all of the DTA will not be realized due to insufficient future taxable income.
  
  
• IRC Section 382 – DTA from Net Operating Losses (NOL): Further, the use of NOLs may be impacted and cause an increase in the valuation allowance, due to Section 382 limitations in the event of a transaction (e.g., merger, acquisition).

We Can Help

Quantum is an emerging industry with significant potential — but it also brings complex accounting and tax challenges that businesses must address thoughtfully. At PKF O’Connor Davies, we help businesses prepare for and navigate the financial, regulatory and compliance implications that arise from engaging in this evolving space. Our experienced team supports clients in developing and applying accounting and tax policies and procedures tailored to the unique demands of quantum-focused operations, helping to ensure sound financial reporting, effective risk management and regulatory alignment.

Additional Helpful Resources

We share the resources below, referenced in this article, for additional information about this topic.

• Fact Sheet: The U.S. National Quantum Initiative (NQI)
• The World Economic Forum: Quantum Economy Blueprint
• McKinsey Quantum Technology Monitor

We also encourage you to frequently visit the Insights page of our PKF O’Connor Davies website for access to all our current articles across topics where we provide support in tax, accounting, auditing, legislative and business advisory services.

Contact Us

If you have any questions, contact your PKF O’Connor Davies client service team or:   

Roman Z. Matatov, CPA, FPAC, FMVA, CGMA, CITP, CVA, CFE, CFF
Partner
rmatatov@pkfod.com | 240.534.2797

Suma Chander
Partner
schander@pkfod.com | 212.286.2600

Thomas J. DeMayo, CISSP, CISA, CIPP/US, CRISC, CEH, CHFI, CCFE
Partner
tdemayo@pkfod.com | 646.449.6353