Write It Off Now. Depreciation, Capitalization Policy, and the 100% Bonus Rule
Small Business Tax Savings Podcast
When not to front-load deductions
Mike explains timing strategies to delay deductions if future income will be higher and planning considerations.
What if you could buy a computer, a machine, or new equipment and deduct the entire cost in the first year instead of waiting 5, 10, or even 30 years? Thanks to major updates in the One Big Beautiful Bill, you can now take a full write-off upfront.
We break down how depreciation works, when to expense versus capitalize, and how the updated bonus depreciation and Section 179 rules give owners more control over their tax bill.
Youโll learn how to time asset purchases, when to avoid front-loading deductions, and why every business needs a written capitalization policy.
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Chapters
(01:00) What Is Depreciation?
Depreciation is the process of spreading out the cost of equipment, vehicles, technology, or buildings over time. Mike defines what qualifies and what does not.
(02:23) Business Use Rules
Only the business-use portion of an asset can be depreciated. Land is never depreciated. Buildings and land improvements are.
(02:45) Three Depreciation Methods
Mike breaks down regular depreciation, 100 percent bonus depreciation, and Section 179 expensing. Each method serves a different purpose depending on your income and tax plan.
(04:25) Section 179 Rules You Must Know
Section 179 lets you expense up to two and a half million dollars a year, but it cannot create a loss. Bonus depreciation can.
(05:24) Which Method Should You Use
The best choice depends on your income, your goals, and whether you want to create or avoid a loss. Mike walks through three scenarios to help you choose.
(07:12) When You Should Not Front Load Deductions
If this year is low income and next year is high income, holding back depreciation may save more money. Timing matters.
(11:44) Rules for Depreciation
You must be in business and the asset must be placed in service during the year. Paying for an item is not enough. It must be usable.
(13:15) The Capitalization Policy Every Business Should Have
A written policy lets you immediately expense any asset under $2,500 per item. Mike explains how it works and why it saves time and paperwork.
(16:47) What Happens When You Sell a Depreciated Asset
If you sell an asset you fully expensed, you may have depreciation recapture. Mike explains basis, gains, and how the tax works.
Podcast Host:
Mike Jesowshek, CPA โ Founder and Host of Small Business Tax Savings Podcast
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๐ ABOUT THE PODCAST
The Small Business Tax Savings Podcast is your go-to resource for cutting-edge tax strategies to help entrepreneurs legally slash their tax bills. Hosted by Mike Jesowshek, CPA, this show breaks dow
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