A firm partner speaking at an AICPA conference laid out fresh guidance on bonus depreciation and Opportunity Zone investing, drawing strong interest from accountants and investors looking to plan for the next filing seasons.
The session, held this week, focused on what has changed, what remains, and how firms should advise clients as incentives phase down and compliance rules tighten. The goal was to offer clear steps before year-end decisions lock in tax outcomes.
“A firm partner and AICPA conference speaker breaks down rule changes related to bonus depreciation and opportunity zone investment.”
Why These Rules Matter Now
Bonus depreciation has been a major tool for businesses buying equipment and certain improvements. After several years at 100 percent, it is declining under prior law. That shift affects cash flow, financing, and deal timing.
Opportunity Zones were created to channel capital into designated communities. The incentive links tax benefits to long holding periods, compliance tests, and reporting. As key dates approach, investors are reassessing timelines and exit plans.
Bonus Depreciation: Phase-Down and Planning
Accountants at the conference said the most common question is simple: how much immediate expensing is still available. Under the Tax Cuts and Jobs Act, full expensing began to step down after 2022. It decreased to 80 percent in 2023 and 60 percent in 2024, with further reductions scheduled.
Speakers urged firms to verify placed-in-service dates, written binding contract rules, and eligibility for used property. They also highlighted the continuing role of Section 179, which is subject to dollar caps and business income limits, but can complement bonus rules for small and mid-sized companies.
- Confirm asset class, recovery period, and placed-in-service timing.
- Model Section 179 vs. bonus choices by entity and state.
- Review state conformity, which may differ from federal rules.
For real estate, qualified improvement property remains a focal point. Practitioners stressed documentation of interior, non-structural work on nonresidential buildings. Errors here can delay deductions or invite adjustments.
Opportunity Zones: Deadlines and Compliance
The Opportunity Zone incentive allows deferral of certain capital gains invested through Qualified Opportunity Funds. The deferral ends at the earlier of a sale or a fixed date set in statute. That date is drawing near, prompting detailed review of basis, step-ups, and cash needs.
Advisers flagged the 10-year holding benefit, which can exclude post-investment appreciation if rules are met. They cautioned, however, that the fund and the underlying business must meet ongoing tests for asset mix, working capital, and improvements.
Attendees said audit activity, while mixed, has increased around fund documentation. The message was to maintain clear records of timing, valuations, and improvement plans. Exit strategies should account for both tax and operational realities.
What Firms Are Watching
Tax professionals are tracking whether Congress will change the bonus depreciation schedule or extend certain Opportunity Zone provisions. The sector is also watching state responses, which can add complexity when projects span multiple jurisdictions.
Lenders and private equity funds are modeling deals with less upfront expensing. That can affect purchase price allocations and EBITDA covenants. For small businesses, the change may push more selective capital spending.
Community developers report steady interest in Opportunity Zone projects tied to housing and industrial space. But investors are building in more time for due diligence and compliance reviews to protect the 10-year benefit.
Practical Next Steps for Taxpayers
- Run side-by-side projections using current bonus rates and Section 179 limits.
- Set placed-in-service targets and verify vendor contracts.
- For Opportunity Zones, test fund compliance quarterly and document working capital plans.
- Stress-test exits under different tax and interest rate paths.
Conference speakers emphasized early coordination among tax, finance, and operations teams. They also recommended revisiting engagement letters and checklists to reflect the latest guidance and exam trends.
The latest guidance suggests a tighter window for aggressive expensing and a maturing Opportunity Zone market that rewards meticulous compliance. Businesses with upcoming investments should lock in timelines and documentation now. Investors in Opportunity Zones should confirm fund health and revisit exit options. The next legislative session could change the math again, so firms will be watching Washington and state capitols for any late-year moves.
