Our second episode of Q&A Over Coffee focuses on how to most effectively take advantage of accelerated depreciation of fixed assets. Our very own Zachary Deo, Tax Director, joins us to discuss tax planning and compliance and offers his tips on accelerated depreciation. As business owners are budgeting and planning ahead they should keep bonus depreciation and the section 179 deduction in mind. There may be options available to them to write off all or most of the cost of an asset. Section 179 allows you to pick and choose on an asset by asset basis.
Zach dives into the history of bonus depreciation and advice for planning ahead towards the planned sunset of the legislation in 2026.
Accelerated depreciation can apply to owners in most industries, especially those that are fixed asset heavy such as manufacturing and real estate. We also discuss the expansion of the definition of real property to apply to additional assets like HVAC systems, roofs, and security and fire suppression systems.
As you consider accelerated depreciation as an option, it’s important to note there may be a difference between the state and federal laws as well as changes in rules over time.
Your CPA can help you determine if and when to use the accelerated depreciation option, as well as shed insight into what the current federal and state laws are. But have these conversations before it’s too late! Planning ahead is key and mid-year is a great time to nail these budgeting decisions down.
Look up state and federal conformity on bonus depreciation regulations – Bloomberg provides a useful resource tool: https://pro.bloombergtax.com/state-conformity-with-federal-depreciation-rules/
IRS guidance on the Additional First Year Depreciation Deduction: https://www.irs.gov/newsroom/additional-first-year-depreciation-deduction-bonus-faq
Sign up below to stay up to date with the Q&A Over Coffee podcast and be notified whenever a new episode drops or suggest a new podcast topic.