A landscaping LLC buys a $90,000 used skid-steer and a $40,000 new pickup in November 2025, plus spends $12,000 investigating a snow-removal expansion. Three Code sections and the tangible property regulations all collide on the same return.
Under §168: 5-year (autos, computers), 7-year (office furniture, most equipment), 15-year QIP and land improvements (150% DB), 27.5-year SL residential rental, 39-year SL nonresidential real. Half-year convention by default. Mid-quarter when more than 40% of personalty is placed in service in Q4. Mid-month applies to all real property.
Election to immediately deduct qualifying tangible personal property and certain real property (roofs, HVAC, fire, alarm, and security systems on nonresidential buildings). SUVs over 6,000 lbs but ≤14,000 lbs GVWR are capped at $31,300 for 2025.
KEY: §179 requires active trade or business income. The deduction cannot create or increase a loss. Unused §179 carries forward indefinitely. Bonus has no income limit.
Automatic 100% deduction for qualified property with class life ≤20 years (including QIP) acquired and placed in service after January 19, 2025 (OBBBA made it permanent; property acquired before January...
Common mistakes
- Treating bonus depreciation as 40% for all 2025 property. OBBBA restored 100% for property acquired after January 19, 2025; the 40% TCJA rate applies only to property acquired before that date.
- Applying §179 without checking the taxable income limit. §179 cannot create a loss; bonus can.
- Forgetting that SUVs 6,000 to 14,000 lbs GVWR are capped at $31,300 of §179 per vehicle.
Bottom line
- 2025 §179 limit $2,500,000 (OBBBA), dollar-for-dollar phaseout begins at $4,000,000 of placed-in-service property; capped by business taxable income (carryover allowed)
- 2025 bonus depreciation 100% for property acquired and placed in service after January 19, 2025 (OBBBA, permanent; 40% only for property acquired before that date), new OR used property with recovery period ≤20 years; automatic unless taxpayer elects out by...
- §179 cannot create a loss (income-limited, carries forward), while bonus has no income limit and can generate an net operating loss (NOL)
- Start-up (§195) and organizational (§248/§709) costs: each deduct up to $5,000, phase out dollar-for-dollar above $50,000, amortize the rest over 180 months
Exam shortcut
See "SUV §179" → answer caps at $31,300 (2025). See "two consecutive years of wrong depreciation" → Form 3115, not amended return. See "syndication cost" or "stock issuance" → NOT amortizable; capitalize permanently.
The full lesson (about 1,506 words, 10 min read) adds 2 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
- 2
- 3
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