Applying the One Big Beautiful Bill changes to Depreciation in Lacerte

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What's new for tax year 2025

The One Big Beautiful Bill brings many changes to Section 179 and Special Deprecation Allowance. Here are some of the key updates:

• Qualified production property placed in service after July 4, 2025, the construction of which began after January 19, 2025, may be eligible for a 100% special depreciation allowance.
• Section 179 deduction dollar limits have been increased, including the amount for SUV's.
• For certain qualified property placed in service before January 20, 2025, a phase-down of the special depreciation allowance is in place.
• Certain qualified property placed in service after January 19, 2025 may be eligible for 100% special depreciation allowance or you can elect to take 40%.
• Domestic research and experimental expenditures may be amortized over either a 60 month, or 10-year period. Different periods apply for foreign research.

For full details, review the 4562 instructions.

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Applying these changes to tax year 2025:

By default, Lacerte will use the new One Big Beautiful Bill Act limits, phase down amounts and SDA amounts automatically for qualified property.

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To elect out of the 100% Special Depreciation Allowance in tax year 2025:

By default, Lacerte will calculate Special Depreciation Allowance at 100% for qualified property. You can opt this to use the pre-One Big Beautiful Bill Act percentages (Either 40 or 60% depending on the asset) by completing the following:

1. Go to the Depreciation screen:
   • Screen 22 (Individual)
   • Screen 14 (Partnership)
   • Screen 21 (Corporate)
   • Screen 16 (S Corporate)
   • Screen 27 (Fiduciary)
   • Screen 39 (Exempt Organization)
2. Scroll down to Additional Information.
3. Check the box for Transition SDA using pre-OBBBA phase down percentages.

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Marking a depreciable asset as Qualified Production Property Defined in Section 168(n).

Special depreciation allowance for qualified production property. You can now elect a 100% depreciation allowance for qualified production property if the property meets the following requirements.

• It is subject to depreciation under section 168.
• It is used by the taxpayer as an integral part of a qualified production activity.
• It is placed in service in the United States or any territory of the United States.
• Its original use commences with the taxpayer and is subject to an election by the taxpayer to treat such portion as qualified production property.
• Construction of the property begins after January 19, 2025, and before January 1, 2029, and is placed in service after July 4, 2025, and before January 1, 2031. Certain existing property acquired and placed into service during these time frames may also qualify.

To mark this as qualified production property in tax year 2025:

1. Go to the Depreciation screen:
   • Screen 22 (Individual)
   • Screen 14 (Partnership)
   • Screen 21 (Corporate)
   • Screen 16 (S Corporate)
   • Screen 27 (Fiduciary)
   • Screen 39 (Exempt Organization)
2. Scroll down to Additional Information.
3. Check the box for Qualified production property defined in section 168(n).

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To elect 100% special depreciation allowance in tax year 2024 for fiscal year business returns:

1. Go to the Depreciation screen:
   • Screen 14 (Partnership)
   • Screen 21 (Corporate)
   • Screen 16 (S Corporate)
   • Screen 27 (Fiduciary)
   • Screen 39 (Exempt Organization)
2. Scroll down to Asset Information.
3. In the OBBBA For Assets after 1/19/2025 section, check either the Initiate special depreciation allowance at 100% checkbox or the Qualified production property under 168(n) for nonresidential property (SDA at 100) checkbox.

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