deductions - Linkenheimer LLP CPAs & Advisors

Increase Your Current Business Deductions Under Tangible Property Safe Harbors

Did your business make repairs to tangible property, such as buildings, equipment or vehicles, in 2025? Such costs may be fully deductible on your 2025 income tax return — if they weren’t actually for “improvements” that must be depreciated over a period of years.

Betterment, restoration or adaptation

In general, a cost that results in an improvement to a building structure or any of its building systems (for example, the plumbing or electrical system) or to other tangible property must be capitalized, with depreciation deductions spread over a few years or longer (depending on depreciation method and property type). An improvement occurred if there was a betterment, restoration or adaptation of the unit of property.

Under the “betterment test,” you generally must capitalize amounts paid for work that’s reasonably expected to materially increase the productivity, efficiency, strength, quality or output of a unit of property or that’s a material addition to a unit of property.

Under the “restoration test,” you generally must capitalize amounts paid to replace a part (or combination of parts) that is a major component or a significant portion of the physical structure of a unit of property.

Under the “adaptation […]

By Linkenheimer LLP|2026-02-16T20:43:40+00:00February 16th, 2026|business, deductions|0 Comments

Before Claiming a Charitable Deduction for 2025, Make Sure You Can Substantiate It

If you itemize deductions on your 2025 individual income tax return, you potentially can deduct donations to qualified charities you made last year. But your gifts must be substantiated in accordance with IRS requirements. Exactly what’s required depends on various factors. In some cases, you must have a written acknowledgment from the charity.

Substantiating cash donations

If you made a cash gift of under $250, documentation such as a canceled check, bank statement or credit card statement is adequate. However, if you received something in return for the donation, you generally must reduce your deduction by its value — and you must have received a “contemporaneous written acknowledgment” from the charity.

Likewise, for a donation of $250 or more, you must obtain such an acknowledgment. In it, the charitable organization must state the amount of the donation, whether you received any goods or services in consideration for the donation and, if you did, the value of those goods or services.

The “contemporaneous” requirement can sometimes trip up taxpayers. It means the earlier of:

The date you file your tax return, or
The due date of your return, including extensions.

Therefore, if you made a donation last year that requires […]

By Linkenheimer LLP|2026-02-16T20:19:03+00:00February 16th, 2026|charity, deduction, deductions|0 Comments

New Law Eases the Limitation on Business Interest Expense Deductions for 2025 and Beyond

Interest paid or accrued by a business is generally deductible for federal tax purposes. But limitations apply. Now some changes under the One Big Beautiful Bill Act (OBBBA) will result in larger deductions for affected taxpayers.

Limitation basics

The deduction for business interest expense for a particular tax year is generally limited to 30% of the taxpayer’s adjusted taxable income (ATI). That taxpayer could be you or your business entity, such as a partnership, limited liability company (LLC), or C or S corporation. Any business interest expense that’s disallowed by this limitation is carried forward to future tax years.

Business interest expense means interest on debt that’s allocable to a business. For partnerships, LLCs that are treated as partnerships for tax purposes, and S corporations, the limitation on the business interest expense deduction is applied first at the entity level and then at the owner level under complex rules.

The limitation on the business interest expense deduction is applied before applying the passive activity loss (PAL) limitation rules, the at-risk limitation rules and the excess business loss disallowance rules. For pass-through entities, those rules are applied at the owner level. But the limitation on the business interest expense […]

By Linkenheimer LLP|2025-12-10T17:26:18+00:00December 10th, 2025|business, deduction, deductions, New Tax Laws|0 Comments

There’s Still Time to Save 2025 Taxes

Just because it’s December doesn’t mean it’s too late to reduce your 2025 tax liability. Consider implementing one or more of these year-end tax-saving ideas by December 31.

Defer income and accelerate deductions

Pushing income into the new year will reduce this year’s taxable income. If you’re expecting a bonus at work, for example, ask if your employer can hold off on paying it until January. If you’re self-employed, you can delay sending invoices so that they won’t be paid until January and thus postpone the revenue to 2026.

If you itemize deductions, remember that deductions generally are claimed for the year of payment. So, if you make your January 2026 mortgage payment in December, you can deduct the interest portion on your 2025 tax return. Similarly, if you’ve received your 2026 property tax assessment and pay it by December 31, you can claim it on your 2025 return (provided your total state and local taxes don’t exceed the applicable limit).

But don’t follow this approach if you expect to be in a higher tax bracket next year. Also, if you’re eligible for the qualified business income deduction for pass-through entities, consider how this approach might affect […]

By Linkenheimer LLP|2025-12-10T17:22:24+00:00December 10th, 2025|deduction, deductions, tax planning, year-end|0 Comments

New Deduction for QPP Can Save Significant Taxes for Manufacturers and Similar Businesses

The One Big Beautiful Bill Act (OBBBA) allows 100% first-year depreciation for nonresidential real estate that’s classified as qualified production property (QPP). This new break is different from the first-year bonus depreciation that’s available for assets such as tangible property with a recovery period of 20 years or less and qualified improvement property with a 15-year recovery period. Normally, nonresidential buildings must be depreciated over 39 years.

What is QPP?

The statutory definition of QPP is a bit complicated:

QPP is the portion of any nonresidential real estate that’s used by the taxpayer (your business) as an integral part of a qualified production activity.
A qualified production activity is the manufacturing, production or refining of a qualified product.
A qualified product is any tangible personal property that isn’t a food or beverage prepared in the same building as a retail establishment in which the property is sold. (So a restaurant building can’t be QPP.)

In addition, an activity doesn’t constitute manufacturing, production or refining of a qualified product unless the activity results in a substantial transformation of the property comprising the product.

To sum up these rules, QPP generally means factory buildings. But additional rules apply.

Meeting the placed-in-service rules

QPP 100% […]

By Linkenheimer LLP|2025-11-20T21:34:34+00:00November 20th, 2025|deduction, deductions, New Tax Laws|0 Comments