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Commercial Real Estate Valuation Made Simple

Posted on by Michelle Antico

An accurate commercial real estate valuation is the backbone of informed decision-making in the property market. Whether you’re buying, selling, or investing, understanding the true value of a property ensures fair transactions and prevents financial pitfalls. But how are these valuations determined, and why are they critical in today’s dynamic market?

This blog explores the key factors influencing property valuations, the role of technology in enhancing accuracy, and practical tips for buyers and sellers to secure fair valuations. 

Why Accurate Property Valuations Matter 

Real estate valuations influence far more than just the buying and selling price of a property. They affect financing options, taxation, and long-term investment returns. Here’s why precision matters: 

  • Buyer Confidence: Accurate valuations help buyers avoid overpaying, ensuring they invest in properties that match their worth. 
  • Fair Selling Prices: Sellers benefit from realistic pricing, preventing undervaluation and ensuring they gain the full value of their asset. 
  • Financing Clarity: Lenders rely on property valuations to determine mortgage amounts, ensuring financial risks are minimized. 
  • Market Transparency: Well-established valuations contribute to stable market dynamics by aligning expectations between parties. 

When property valuations are inaccurate, the result is often disputes, missed opportunities, or improper financial decisions. 

Key Factors That Influence Property Valuations 

Determining a property’s value involves more than a surface-level assessment. These key factors are at the heart of every valuation process: 

Location 

Location is a primary driver of property value. Proximity to schools, public transportation, parks, and commercial areas can significantly raise a property’s appeal. 

For example: 

  • Properties in urban areas or growing suburbs with access to amenities generally see higher valuations. 
  • Conversely, properties in less accessible or high-crime areas may experience lower valuations. 

Market Trends 

The broader real estate market heavily influences property values. Assessment factors include: 

  • Supply and Demand: Limited inventory can push prices up, while an oversupply may lead to depreciation. 
  • Economic Conditions: A thriving economy typically boosts valuations due to increased buyer confidence. 
  • Neighborhood Development: Urban development projects, such as new infrastructure or businesses, can enhance a property’s value.

Property Condition 

A property’s physical state, design, and functionality directly affect its valuation. Considerations include: 

  • Age of the Property: Newer properties with modern designs often fetch higher valuations. 
  • Upgrades and Renovations: Well-maintained homes or those with updated kitchens, bathrooms, and energy-efficient systems often command premium prices. 
  • Structural Integrity: Any signs of foundational issues or deferred maintenance (e.g., leaking roofs) lower valuations substantially.

Comparable Properties 

Valuers also use “comps” (comparable properties) to gauge the price of a property against similar ones recently sold in the area. Differences in size, condition, or upgrades are factored into a comparative analysis to derive a fair market price. 

Technology, Tax Implications, and Trusted Sources in Modern Valuations 

As the real estate industry evolves, technology and regulatory changes continue to shape how valuations are performed. In this environment, it’s more important than ever to work with sources you can trust. Here’s how to navigate this landscape with confidence: 

Trusted Industry Sources 

When it comes to a commercial real estate valuation, relying on trusted sources is essential. Working with professionals and organizations known for their expertise, transparent methodologies, and ethical standards can provide you with confidence in your results. Utilizing credible sources helps ensure your valuation is accurate, objective, and well-supported. This approach offers peace of mind whether you are reviewing, commissioning, or acting on a property valuation. 

Tax Implications and Regulatory Changes 

Property valuations aren’t just about sales or investments; they’re also a crucial part of your tax planning strategy. Changes in federal or state tax laws, such as adjustments to estate tax exemptions or new regulations on property transfers, can significantly alter your need for an up-to-date valuation. For instance: 

  • If the estate tax exemption sunsets or decreases, having a precise, defensible valuation becomes even more important for succession planning and wealth transfer. 
  • New laws may affect how gains are calculated for capital gains taxes when selling or transferring real estate. 
  • Regular valuations can ensure you’re not caught off guard if tax regulations shift suddenly. 

Staying informed and consulting reputable sources, such as those previously mentioned, will help you adapt to these changing tax landscapes and make more strategic decisions. 

Tips for Buyers and Sellers to Ensure Fair Valuations 

For both buyers and sellers, understanding the factors at play and conducting thorough due diligence is critical to ensuring fair property valuations. Here are some practical tips: 

For Buyers 

  1. Research the Market: Examine comparable properties in the same area to confirm the asking price aligns with market conditions. 
  2. Hire an Independent Appraiser: Don’t solely rely on the seller’s valuation. Hiring a third-party appraiser adds an extra layer of confidence. 
  3. Evaluate the Long-Term Potential: Look at factors such as neighborhood development plans or infrastructure projects to assess future value growth.

For Sellers 

  1. Invest in Repairs: Fixing structural issues or making cosmetic upgrades could yield higher appraisals and increase buyer interest. 
  2. Stay Realistic About Pricing: Overpricing may deter buyers, while underpricing risks underselling your asset. Leverage expert advice to find a realistic starting point. 
  3. Work with Professionals: Collaborate with experienced real estate agents and appraisers to back your listing with credible pricing information.

For Both Buyers and Sellers 

  • Understand the Valuation Report: Whether buying or selling, ensure you’re familiar with how the property was valued. Don’t hesitate to ask questions or request clarifications. 
  • Be Wary of Red Flags: If a property’s valuation feels suspiciously high or low, dig deeper to determine underlying reasons. Sudden price changes might indicate market abnormalities or hidden defects.

Ensuring Confidence with an Accurate Commercial Real Estate Valuation

Accurate real estate valuations are crucial in navigating one of the most significant financial decisions people face. With an understanding of the factors that influence property values, as well as the benefits of leveraging technology for accuracy, buyers and sellers alike can approach the process with greater confidence. By investing in expert guidance, conducting thorough research, and staying informed about market trends, you can ensure fair and transparent property transactions throughout the entire process.

If you’re seeking professional support for your next commercial real estate valuation or would like to stay informed about the latest industry trends, please don’t hesitate to contact our team. We’re here to help you make informed, confident decisions about your real estate investments.

Real Estate Portfolio Management in a Dynamic Market

Posted on by Michelle Antico

Real estate portfolio management requires more than just acquiring properties; it entails crafting a strategy that adapts to market dynamics while driving long-term value. Taking a proactive and data-driven approach can significantly enhance outcomes for both real estate investors and developers.

This guide explores the strategic methods and tools that enable effective real estate portfolio management, focusing on dynamic markets like New Jersey. 

Strategic Value Creation

Location Targeting  

In competitive markets like New Jersey, location targeting has become a critical strategy for real estate investors and developers. Municipalities with NJ Transit train stations, particularly those offering direct access to New York City, like Newark, Elizabeth, Bayonne, and Plainfield, are highly sought after.

These areas attract commuter demand and align with trends favoring high-density, walkable developments. Developers are further incentivized by programs like PILOT (Payment instead of Taxes) agreements, which provide tax breaks for 10 to 30 years. This encourages targeted growth in redevelopment zones, benefiting the developers and the municipalities.

Why it matters: Choosing properties near transit hubs secures a strong tenant base, supports sustainability goals, and positions investments for long-term success.

Staged Investment

Breaking down large-scale projects into smaller, more manageable phases is another savvy strategy. Each stage can have its own timeline, financing, and leasing plan, offering greater flexibility in adapting to changing market conditions.

Example: A developer might first complete residential units for immediate cash flow while reserving retail or recreational spaces for a future phase based on market demand.

Why it matters:Staged investments reduce risks and allow developers to learn from initial phases to optimize subsequent ones. Additionally, phased approaches can improve cash flow efficiency, ensuring investors aren’t over-leveraged.

Long-term Value Growth  

Mixed-use developments have become a hallmark of real estate strategy in New Jersey. These designs integrate residential, retail, and recreational spaces to create vibrant, self-sustaining communities. This not only attracts tenants but also promotes strong occupancy and retention rates.

Case Example:A development in Plainfield could blend luxury apartments, upscale fitness centers, and commercial spaces catering to both residents and the surrounding neighborhood. This approach creates demand far beyond the property itself. 

Why it matters: Mixed-use developments position assets as resilient investments aligned with evolving market preferences and growing consumer expectations for convenience and community amenities.

Data-Driven Property and Asset Management 

Automation of Workflows  

Streamlining operations through AI and automation has revolutionized real estate management in dynamic markets. For instance, property management platforms now offer robust capabilities to automate routine tasks like rent collection, maintenance requests, and financial reporting.

Pro Tip: When choosing platforms, consider scalability, ease of integration with other tools (like accounting software), and customization options. With the right systems in place, efficiency will soar, while costs and errors will reduce drastically.

Why it matters: Time saved on repetitive processes allows for a more strategic focus on driving higher returns and tenant satisfaction. 

Consolidating Data Across Systems  

Integrating data from disparate tools like leasing, construction, and accounting software into one unified platform is becoming an industry standard. Consolidating this information creates a “single source of truth,” improving transparency and decision-making. 

Example: Imagine a New Jersey-based developer consolidating leasing data and construction budgets into one dashboard. They could then generate real-time insights on occupancy trends, construction progress, and ROI.

Why it matters: Unified data reduces inefficiencies, accelerates decision-making, and minimizes the risk of human error, leading to stronger portfolio performance.

Why Adaptability is the Key to Success  

External forces like economic shifts, policy changes, and evolving consumer behaviors continually reshape the commercial real estate market. Developers and investors must stay agile, revisiting and refining strategies based on data, market insights, and emerging opportunities.

Investing in properties with built-in flexibility, such as those near transit hubs with opportunities to phase development or switch property use, mitigates risks and positions portfolios for sustained returns.

Maximize Your Real Estate Returns with Expert Guidance

Real estate portfolio management combines strategy, data-driven insight, and on-the-ground knowledge of market trends. Focusing on location, staged investments, and technology-enabled management can yield exceptional results for real estate investors and developers, especially in dynamic markets like New Jersey.

Are you looking to optimize your real estate investments further? Our real estate experts at Wiss specialize in helping you make data-smart choices to maximize returns. Contact us today!

Trust and Estate Tax Compliance: Strategies to Minimize Liabilities

Posted on by Michelle Antico

Managing trust and estate tax reporting while ensuring proper income and expense allocation doesn’t have to be overwhelming. With the right strategies, you can minimize tax liabilities, fulfill your fiduciary duties, and protect beneficiaries’ interests—all while staying compliant with complex tax regulations.

Trust and estate tax compliance involves careful coordination between fiduciary accounting principles, federal tax requirements, and strategic planning. The decisions you make about income and expense allocation directly impact both the trust’s tax burden and the taxes owed by beneficiaries. 

This guide outlines proven strategies to help you navigate these challenges effectively, from understanding the basics of reporting requirements to implementing advanced tax optimization techniques.

Understanding the Basics of Estate and Trust Tax Compliance 

Unlike individuals, estates and trusts are subject to compressed tax brackets, hitting the top federal income tax rate at just $15,650 of annual income. This creates a strong incentive to distribute income to beneficiaries who may be in lower tax brackets. 

Form 1041 is the primary reporting tool, while Schedule K-1 allocates each beneficiary’s share of income, deductions, and credits. Beneficiaries then report this information on their personal tax returns, effectively passing through the distributed income.  

How Income and Expense Allocation Works 

The foundation of proper allocation lies in understanding the distinction between principal and income. The principal represents the original assets that form the trust or estate, such as cash, investments, real estate, and other property. Income consists of earnings generated by the principal, such as interest, dividends, rent, and royalties.  

This distinction matters because different beneficiaries may have rights to other portions. Income beneficiaries receive distributions from the trust’s earnings, while remainder beneficiaries ultimately receive the principal upon the trust’s termination.  

Capital gains typically belong to principal rather than income, though trust documents can specify different treatment. The trust instrument governs these allocations, with state law (often the Uniform Principal and Income Act) providing default rules when the document is silent. 

Expense allocation follows similar principles. Direct expenses, those related to generating specific income, are allocated against that income. Rental property expenses, for example, offset rental income. Indirect expenses like trustee fees must be allocated between taxable and tax-exempt income based on the relative amounts of each. 

Key Compliance Considerations 

Fiduciary duties require trustees to act impartially toward all beneficiaries when making allocation decisions. This means neither income nor remainder beneficiaries should be unfairly disadvantaged by allocation choices. 

The concept of Distributable Net Income (DNI) plays a central role in tax compliance. DNI limits the amount of income that can be taxed at the beneficiary level, preventing double taxation while ensuring retained income is taxed to the trust. 

State compliance requirements vary significantly. Some states, such as New Jersey, require separate fiduciary returns when the gross income exceeds $10,000. Understanding both federal and state requirements is essential for complete compliance. 

Strategic Planning for Effective Tax Management 

Tax Planning and Optimization Strategies 

Smart distribution timing can significantly reduce overall tax burdens. Consider the tax brackets of both the trust and its beneficiaries when planning distributions. Moving income from a trust taxed at higher rates to beneficiaries in lower brackets creates immediate tax savings. 

The distinction between simple and complex trusts offers different planning opportunities. Simple trusts must distribute all income annually and cannot distribute principal; capital gains are typically taxed to the trust. Complex trusts provide more flexibility, allowing trustees to retain income or distribute principal as needed. 

Strategically utilizing available deductions and exemptions can reduce taxable income. Charitable contributions by the trust reduce taxable income dollar for dollar, while proper expense allocation maximizes available deductions. 

Income splitting among multiple beneficiaries can reduce overall tax liability. When permitted by the trust document, distributing income to several beneficiaries rather than one can keep everyone in lower tax brackets. 

Advanced Distribution Strategies 

The timing of distributions within the tax year can impact which year’s tax liability they affect. Distributions made within the first 65 days of the following tax year can be treated as made in the prior year, providing flexibility in tax planning. 

Special allocations of specific income types to particular beneficiaries are permissible when they have economic substance beyond tax benefits. For example, allocating rental income to a beneficiary involved in property management may be both economically logical and tax-efficient. 

Consider the Net Investment Income Tax (NIIT) when planning distributions. Trusts face the 3.8% NIIT on retained income exceeding specific thresholds, making distributions to beneficiaries below NIIT thresholds particularly valuable.

Tax-efficient investments at the trust level can reduce the overall tax burden. Municipal bonds generate tax-exempt income, while growth investments may defer taxation until sale. 

Expense Management and Allocation 

Proper expense classification between income and corpus expenses is crucial for accurate tax reporting. Income expenses, those related to generating current income, reduce the amount available for distribution to income beneficiaries. Corpus expenses, which preserve or improve principal, are typically charged against the principal. 

Investment management fees present allocation challenges. Fees related to generating taxable income are deductible, while costs related to tax-exempt income are not. Proper allocation requires calculating the proportion of tax-exempt income to total revenue. 

Administrative expenses, such as trustee fees and accounting costs, must be allocated between taxable and tax-exempt income using the same proportional approach. This allocation affects both the trust’s deductions and the beneficiaries’ tax obligations.  

Legal fees require careful analysis. Fees for tax advice or tax return preparation are generally deductible, while fees for trust administration may or may not be deductible depending on their nature and purpose.  

Professional Guidance and Best Practices 

Working with Professional Advisors 

Estate and trust taxation involves complex interactions between federal tax law, state regulations, and fiduciary duty requirements. Professional guidance from experienced trust and estate attorneys or tax professionals is essential for proper planning and compliance. 

Regular trust analysis helps identify optimization opportunities and compliance issues before they become problems. Professional advisors can review allocation methods, distribution strategies, and reporting procedures to ensure they align with current law and best practices. 

Tax law changes frequently, and professional advisors stay current with developments that could affect your trust or estate. The Tax Cuts and Jobs Act of 2017, for example, significantly impacted trust taxation, and future changes are likely. 

Coordination between legal and tax advisors ensures that trust administration decisions support both legal compliance and tax efficiency. This collaborative approach prevents conflicts between fiduciary duties and tax optimization goals. 

Maintaining Accurate Records 

Comprehensive record-keeping forms the foundation of successful tax compliance. Maintain detailed records of all trust transactions, including receipts, disbursements, asset valuations, and allocation decisions. 

Document the reasoning behind allocation decisions, particularly when exercising discretion permitted by the trust document. This documentation supports the decisions if questioned by beneficiaries or tax authorities. 

Separate accounting for different types of income and expenses facilitates accurate tax reporting and demonstrates proper fiduciary accounting. Use accounting software designed for trust and estate administration when possible. 

Regular reconciliation between trust accounting records and tax reporting ensures consistency and identifies discrepancies early. This practice reduces the risk of errors that could trigger audits or beneficiary disputes. 

Avoiding Common Pitfalls 

Clear trust documents prevent many allocation disputes and compliance issues. When drafting or reviewing trust documents, ensure they provide adequate guidance for income and expense allocation decisions. 

Proper trust funding is essential for realizing intended tax benefits. Assets must be legally transferred to the trust to be subject to trust taxation rules. Incomplete funding can result in unexpected tax consequences. 

Regular plan reviews ensure the trust structure remains appropriate as circumstances change. Changes in family situations, asset values, or tax laws may require adjustments to allocation strategies or distribution policies. 

Communication with beneficiaries about tax implications helps prevent misunderstandings and disputes. Provide beneficiaries with clear explanations of their Schedule K-1 information and how it affects their personal tax returns.  

Moving Forward with Confidence 

Estate and trust tax compliance requires attention to detail, strategic thinking, and ongoing professional guidance. The strategies outlined here provide a framework for effective management, but each situation presents unique challenges and opportunities. 

Success depends on understanding the interplay between fiduciary duties, tax optimization, and beneficiary needs. By implementing proper allocation methods, maintaining accurate records, and working with qualified professionals, you can navigate these complexities while protecting all parties’ interests. 

The investment in proper planning and compliance pays dividends through reduced tax burdens, minimized disputes, and successful achievement of the trust’s purposes. Take the time to implement these strategies thoughtfully, and don’t hesitate to seek professional guidance when needed. 

Your estate and trust planning deserves the same attention to detail and strategic thinking that built the wealth being preserved and transferred. With the right approach, you can ensure that your legacy planning achieves its intended goals while minimizing unnecessary tax burdens and compliance risks. Contact us today!

Why Outsource Accounting: Benefits of Outsourcing Accounting Services

Posted on by Bizi Business

Running a business means wearing a lot of hats, especially when it comes to managing finances. As operations grow, the time and energy spent on accounting can start pulling focus from what truly drives the company forward. That’s when many business owners start asking, Why outsource accounting?

In this article, we’ll look at the key benefits of outsourcing accounting services, such as cost efficiency, access to specialized expertise, improved accuracy, and flexibility, and how the right support model can help business leaders refocus on strategy and long-term growth.

What is Outsourced Accounting?

Outsourced accounting means handing off your business’s financial work to an outside team instead of keeping it all in-house. It’s becoming a go-to move for startups, small businesses, and growing companies that want solid financial support without building out a full accounting department.

What’s Usually Included in Outsourced Accounting?

Outsourced accounting solutions are tailored to what the business needs most. They often include:

  • Bookkeeping
  • Managing payables and receivables
  • Running payroll
  • Monthly financial reports and statements

This kind of work is done by professionals who live and breathe accounting, so you’re getting both clean books and smart financial advice.

Why Businesses Are Moving to Outsourced Accounting

Bringing on a full in-house accounting team is expensive and time-consuming. With outsourcing, you skip the overhead and get straight to working with experienced pros who already know the ropes in your space.

At Wiss, our Accounting Support team integrates directly into your operations. We handle the day-to-day, keep your numbers up to date, and give you reporting and insights that help you make decisions with more confidence and less guesswork.

For many companies, outsourcing starts as a practical solution. Over time, it becomes a strategic advantage. Here’s why more companies are choosing to outsource their accounting support.

1. Cutting Costs Without Cutting Corners

One of the clearest benefits of outsourcing is cost efficiency. Putting together an in-house finance team means shelling out for full-time salaries, benefits, payroll taxes, plus the cost of software and keeping everyone trained. For small and mid-sized businesses, that adds up fast.

Outsourcing replaces that fixed overhead with a model that adapts to your needs. There’s no hiring process to manage, no software to buy or maintain, and no surprise costs tied to employee turnover. Instead, you work with a dedicated team that scales as needed, providing only the services that are relevant to your current stage of growth.

With outsourced accounting, you stay on top of your numbers without overextending your team or your budget. It’s a lean and flexible setup that scales with your business. That’s why more companies are offloading accounting work while still keeping things accurate and under control.

2. Expertise and Tools You Might Not Get In-House

When you outsource accounting, you’re not just filling a gap. You’re upgrading the way your finances are handled. The teams you work with bring experience across industries, up-to-date knowledge of tax codes and compliance standards, and a strong understanding of what good financial operations look like.

You also gain access to advanced tools that you may not implement on your own. From cloud-based platforms to custom dashboards, outsourced accounting puts professional systems in place without requiring a full internal buildout.

At Wiss, our team combines finance expertise with practical technology that makes it easier to monitor performance, plan ahead, and meet reporting deadlines with confidence.

3. Flexibility That Fits Where You’re Headed

Business doesn’t always follow a straight path. Some months are busier than others, new projects pop up, and plans change. Outsourced accounting allows you to adjust that support over time, without having to hire or cut staff. You can turn support up or down depending on what’s going on.

That kind of flexibility is a game-changer for startups, eCommerce brands, or any company trying to grow without overcommitting. You get the help you need when you need it and stay focused on what matters most, without sacrificing quality or getting stuck in staffing decisions.

4. Keep Things Compliant and Avoid Headaches

Keeping up with tax rules and financial regulations takes work. And if something slips through the cracks, it can cost you. That’s where outsourced accounting helps. These teams stay on top of changing laws, deadlines, and reporting requirements so you don’t have to stress about it.

They make sure your books are clean, your filings are on time, and your systems are ready in case you ever face an audit.

When pros are handling your compliance, it’s not just about avoiding mistakes; it’s about peace of mind.

5. More Time to Actually Grow Your Business

When you’re not stuck in spreadsheets or chasing receipts, you’ve got more time to focus on what really matters: building your business, serving your customers, and planning what’s next. Outsourcing your accounting clears up the busywork so leadership can lead.

You’re no longer burning hours closing the books or stressing over deadlines. That time and headspace go back into growing the business.

If your team’s already stretched thin, handing off accounting might be the move that frees you up. Reach out to Wiss to see how we can help you take back your time and zero in on what’s ahead.

Is Outsourcing Accounting Right for You?

Not sure if outsourced accounting is the right move? Ask yourself:

  • Is your team spending too much time on bookkeeping?
  • Are financial reports always running late or unclear?
  • Are you growing faster than your systems can handle?
  • Are rising costs pushing you to rethink operations?

If you answered “yes” to any of these, outsourcing could offer the relief and structure your business needs.

Speak with a Wiss advisor to explore how outsourced accounting can align with your goals and support smarter financial decisions.

What Is Advisory in Accounting? A Practical Overview from Wiss

Posted on by Bizi Business

Accounting today goes far beyond crunching numbers. Business leaders are no longer looking just for someone to reconcile accounts. They want actionable insights, strategic planning, and support in making sound financial decisions. That’s where advisory in accounting steps in.

This form of service focuses on helping companies plan, strategize, and act based on financial information. It’s a shift from reacting to past numbers to using those numbers to influence what comes next.

So, what is advisory in accounting, and how is it different from what your accountant may have been doing all along? This article breaks it down clearly and practically.

What Is Advisory in Accounting?

Advisory in Accounting refers to a set of services where accountants apply their expertise to help clients make informed decisions. Rather than just reporting on what already happened, advisory professionals offer guidance on what to do next.

They work closely with company leaders to understand their goals, then deliver recommendations based on a mix of financial analytics, strategic knowledge, and industry best practices.

How Advisory Accounting Differs from Traditional Accounting

Traditional accounting tells the story of where a business has been. Advisory services focus on where it’s going.

The advisory accounting definition highlights its role in helping leadership teams stay agile. It’s about equipping them to respond to market shifts, assess opportunities, and make better financial calls.

Types of Advisory Accounting Services

1. Outsourced Accounting Support

This combines bookkeeping with strategic guidance. Instead of hiring in-house staff, companies can work with Wiss to manage financials while receiving expert advice on growth, operations, and performance.

2. CFO Advisory

This service gives businesses access to senior financial leadership without the cost of a full-time CFO. From budgeting and capital planning to investor reporting, it’s a flexible way to get big-picture financial advice.

3. Financial Planning and Analysis (FP&A)

Advisory teams help create forecasts, interpret trends, and plan for different business scenarios. This adds confidence to decisions about expansion, hiring, or cost control.

4. Financial Close and Reporting

Accurate and timely reports are key to business oversight. Advisory experts help streamline the close process and ensure leadership has the data needed to respond quickly.

5. Technology and Automation Support

New platforms can automate repetitive tasks, but choosing the right tools and integrating them into daily operations takes expertise. That’s where advisors come in. Advisory professionals help streamline this process while keeping it compliant and transparent.

Why Accounting Advisory Matters Now More Than Ever

Business owners and finance leaders are recognizing that accurate data alone isn’t enough. They want to know what the data means and what to do with it. Advisory services provide that missing link.

Here are three reasons this shift is accelerating:

  1. Greater complexity. As companies grow, their financial systems become harder to manage without guidance.
  2. More tools. With cloud platforms, AI, and new tech, businesses need help choosing the right systems and integrating them into operations.
  3. More strategic decisions. Leaders are expected to make faster decisions with higher stakes. Advisory accounting provides clarity in these moments.

Who Should Consider Advisory in Accounting?

While any business can benefit, advisory is especially useful for:

  • Mid-sized firms planning expansion
  • Companies looking to restructure or scale
  • Startups without internal finance leadership
  • Organizations preparing for acquisition or funding

The common thread is a need for financial guidance that is relevant, practical, and forward-looking.

How Wiss Helps Clients Put Strategy Into Practice

Wiss delivers advisory services that are tailored, not templated. The team learns the business, understands the goals, and offers real-world recommendations based on numbers and industry experience.

From managing day-to-day financial operations to advising on long-term planning, Wiss positions itself as a partner in the process. That partnership is grounded in communication, transparency, and results.

You can see this approach in action through Wiss’ accounting advisory services, which combine tactical execution with strategic guidance.

What Is Accounting Advisory in Summary?

To put it simply:

  • Advisory in accounting is about using financial expertise to help businesses make smarter decisions.
  • It focuses on the future, not just the past.
  • It supports strategy, growth, and operational improvements.
  • It works best when it’s built into ongoing business conversations, not kept separate.

This is not a luxury service. For many companies, it’s the new standard for what they expect from a financial partner.

Talk to Wiss About What Comes Next

Wiss offers more than accounting. We deliver strategic financial leadership designed for the realities of modern business. If you’re reevaluating your finance function, exploring expansion, or simply want a clearer view of your numbers, a conversation with Wiss is a smart place to start.

Reach out here to schedule a discussion with our team. Let’s talk about what you want to build, and how we can help you get there.

R&D Tax Relief: How the OBBBA Restores R&E Deductions

Posted on by Michelle Antico

The landscape of research and development (R&D) tax benefits has undergone a dramatic transformation. After years of complex capitalization requirements that strained business cash flow, the newly enacted tax legislation brings welcome R&D tax relief to companies investing in innovation.

The One Big Beautiful Bill Act (P.L. 119-21) (“OBBBA”), signed into law on July 4th, permanently restores immediate deductions for domestic research and experimental expenditures. This change reverses one of the most criticized aspects of the Tax Cuts and Jobs Act, providing businesses with the cash flow benefits they need to fuel innovation and growth. 

The Problem: When R&D Deductions Disappeared 

Before tax years beginning on or after January 1, 2022, businesses could deduct research and experimental (R&E) expenses in the year they were incurred. This straightforward approach encouraged innovation by providing immediate tax benefits to companies that invested in new products, technologies, and processes.  

The Tax Cuts and Jobs Act changed everything. Starting with tax years beginning on or after January 1, 2022, businesses were required to capitalize domestic R&E expenses and amortize them over five years. Foreign R&E expenses faced a 15-year amortization period. This shift created significant cash flow challenges, particularly for small and medium-sized businesses that rely heavily on R&D investment. 

The capitalization requirement affected a wide range of activities, from software development to product testing. Companies found themselves paying taxes on income they had already reinvested in research, creating a financial burden that discouraged R&D tax relief. 

The Solution: New IRC Section 174A 

OBBBA introduces IRC Section 174A, which permanently allows businesses to deduct domestic R&E expenditures in the year incurred. This provision applies to amounts paid or incurred in taxable years beginning after December 31, 2024. 

Key Features of the New Law 

Immediate Deduction Option

Businesses can now deduct domestic R&E expenses in the year they’re incurred, restoring the pre-2022 treatment that encouraged investment in innovation. 

Flexible Capitalization Alternative

Companies can elect to capitalize and amortize domestic R&E expenditures over at least 60 months, beginning when they first realize benefits from the spending. 

Extended Amortization Election

Under IRC Section 59(e), taxpayers can elect to capitalize and recover domestic R&E expenditures over 10 years, providing additional flexibility for tax planning. 

Software Development Clarification

The act explicitly states that amounts paid for software development can be treated as R&E expenditures, removing uncertainty in this critical area. 

Foreign Research Remains Unchanged 

While domestic R&D receives favorable treatment, foreign research expenses continue to face the 15-year amortization requirement established by the Tax Cuts and Jobs Act. This distinction encourages companies to conduct research activities within the United States.  

The foreign research rules apply to expenditures attributable to research conducted outside the United States, as defined in IRC Section 41(d)(4)(F). Companies with international operations must carefully track where their research activities occur to properly apply these rules. 

Special R&D Tax Relief for Small Businesses 

The new law includes particularly generous provisions for small businesses, recognizing that the capitalization requirements disproportionately harmed these companies. 

Retroactive Application 

Small business taxpayers meeting the gross receipts test under IRC Section 448(c) can retroactively apply the new immediate deduction rules to tax years beginning after December 31, 2021. This means eligible businesses can amend their 2022, 2023, and 2024 returns to claim immediate deductions for domestic R&E expenses. 

To qualify, businesses must have average annual gross receipts of $31 million or less over the three years ending with the prior tax year. This retroactive relief offers significant cash flow benefits through amended returns or changes to the accounting method. 

Accelerated Deduction Election 

All taxpayers, regardless of size, can elect to accelerate the deduction of remaining unamortized domestic R&E expenditures from the 2022-2024 period. These amounts can be deducted over either one or two tax years, beginning after December 31, 2024.

This provision helps businesses recover the tax benefits they’ve been waiting for since the capitalization requirements began. The election must be made by the due date of the taxpayer’s federal income tax return, including extensions.

Making the Election 

The new law provides specific guidance on how to make elections under IRC Section 174A: 

Timing Requirements

Elections must be made by the due date of the taxpayer’s federal income tax return, including extensions, for the tax year in which the election is made.  

Binding Nature

Once made, the election applies to the tax year for which it’s made and all subsequent tax years unless the taxpayer receives IRS consent to change methods or periods. 

Documentation

While specific forms haven’t been released, taxpayers should expect to file Form 3115 (Application for Change in Accounting Method) or similar documentation to make these elections.

Coordination with Other Tax Benefits 

The new law carefully coordinates IRC Section 174A with existing tax benefits to prevent double-dipping while maximizing legitimate tax savings. 

Research Credit Interaction 

Taxpayers must reduce their IRC Section 174A deduction by any IRC Section 41 research credit claimed. Alternatively, they can elect to claim a reduced IRC Section 41 research credit instead of reducing the deduction. 

State Tax Considerations 

Some states may continue to require amortization for domestic research expenditures even during periods when federal law allows immediate deduction. Important to monitor any future state tax guidance in this area. 

Looking Ahead: Future Enhancements 

Tax experts anticipate additional improvements to R&D tax relief incentives in future legislation. Potential enhancements include: 

Refundable Credits

Some lawmakers have proposed making the research credit refundable for startups, providing cash benefits to companies that don’t have current tax liabilities. 

Enhanced Credits

There’s discussion of providing enhanced credits for specific industries, such as artificial intelligence, where the United States seeks to maintain competitive advantages. 

Expanded Scope

Future legislation might broaden the definition of qualifying research or provide additional benefits for certain types of innovation activities. 

What This Means for Your Business 

The restoration of immediate R&E expense deductions represents a significant victory for innovation-focused businesses. Companies should take several steps to maximize these benefits: 

Review Past Returns

Small businesses should evaluate whether they qualify for retroactive application of the new rules and consider amending returns for 2022-2024.  

Plan Future Elections

All businesses should determine whether immediate deduction or capitalization better serves their tax planning objectives.

Document Activities

Ensure proper documentation of R&D activities to support deductions and distinguish between domestic and foreign research.

Monitor Guidance

Watch for IRS guidance on election procedures and Form 3115 requirements.

Ready to maximize your R&D tax benefits? Start planning your strategy today and fuel your innovation for tomorrow. Contact us today.

The Tax Act 2025: What You Need to Know

Posted on by Michelle Antico

The Tax Act 2025, also known as the One Big Beautiful Bill Act (OBBBA), has officially been signed into law. This groundbreaking legislation introduces some of the most significant tax reforms since the Tax Cuts and Jobs Act of 2017 (TCJA). From making previous tax breaks permanent to unveiling new benefits for individuals, families, and businesses, the 2025 Tax Act will undoubtedly impact millions of Americans.

This guide breaks down the key provisions, helping you understand how they might affect your taxes starting in 2025 and beyond. Whether you’re a taxpayer, business owner, or part of a family looking to maximize your benefits, here’s what you need to know. 

Key Tax Changes at a Glance

Before diving into the details, here’s a quick overview of the primary changes enacted by the Tax Act 2025: 

  • Individual Tax Updates: Lower tax rates remain permanent, an enhanced standard deduction is introduced, and the Child Tax Credit expands significantly. 
  • Business Tax Provisions: Full expensing of domestic R&D returns, the Section 179 deduction limit increases, and the Qualified Business Income (QBI) deduction is made permanent. 
  • New Benefits for Workers and Families: Deductions for cash tips, overtime pay, and U.S.-assembled auto loan interest are introduced temporarily. 
  • Estate and Gift Tax Enhancements: The exemption threshold gets a major permanent boost.

Now, let’s break down these changes in greater detail.

Individual Tax Updates 

Lower Tax Brackets Made Permanent  

One of the most impactful developments is the permanency of the reduced tax brackets introduced under the TCJA. Starting in 2025, individual taxpayers will continue benefiting from the same brackets—10%, 12%, 22%, 24%, 32%, 35%, and 37%—with expanded income thresholds for joint filers to minimize the so-called “marriage penalty” by maintaining the brackets at twice the amounts for single taxpayers.

Cash Tips Deduction 

Service industry employees can now deduct up to $25,000 annually in qualified reported tips for the 2025–2028 tax years. This benefit phases out for higher earners but provides meaningful savings for lower-income workers.

Overtime Pay Deduction 

Similar to the tip deduction, workers may deduct up to $12,500 annually in overtime pay ($25,000 for married couples filing jointly) during the same 2025–2028 period. It is important to note that recent IRS guidance provides that only the pay that exceeds the regular rate of pay – such as the “half” portion of “time-and-a-half” – qualifies for the deduction.  Again, this provision phases out for higher earners.

U.S.-Assembled Auto Loan Interest Deduction 

For taxpayers purchasing new, U.S.-assembled vehicles, car loan interest up to $10,000 will be deductible. This benefit, available for 2025 through 2028, also phases out for higher-income taxpayers. (Lease payments do not qualify.)

Enhanced Standard Deduction 

The standard deduction increases significantly: 

  • Married couples filing jointly: $31,500 
  • Heads of household: $23,625 
  • Single filers: $15,750

These increases will reduce taxable income for millions of filers who do not itemize.

Expanded Child Tax Credit 

The Child Tax Credit is now more valuable and permanent: 

  • Per qualifying child: Increased from $2,000 to $2,200 for 2025, with annual inflation adjustments starting in 2026. 
  • Credit for other dependents: The $500 credit remains unchanged and will not be adjusted for inflation.

However, eligibility has been tightened. Both the taxpayer and the child must have valid Social Security numbers to claim the credit. 

State and Local Tax Relief 

The tax act 2025 temporarily raises the SALT deduction cap from $10,000 to $40,000, with 1% annual increases on the cap through 2029. However, the deduction phases out for taxpayers with modified adjusted gross income over $500,000, but never below $10,000. The cap reverts to $10,000 in 2030, making this a short-term provision.

Senior Deduction 

Taxpayers aged 65 or older can claim an additional $6,000 deduction per person, on top of the existing standard deduction for seniors under existing law. This applies to both itemizers and non-itemizers but phases out for modified AGI over $75,000 ($150,000 for joint filers). To qualify, individuals must be 65 by year-end, include their SSN on the return, and file jointly, if married.

Pease Limitation Repealed 

Starting in 2026, the old Pease limitation—which reduced itemized deductions for high earners—is back but with a twist. In its place, a new rule slightly reduces itemized deductions for top-income taxpayers. If you earn above the 37% tax bracket, your itemized deductions could be slightly reduced.

Importantly, this new rule doesn’t affect the deduction for qualified business income (QBI), which remains fully available.

Limitation on Mortgage Interest Deduction 

The new law permanently sets the mortgage interest deduction limit at $750,000 for home acquisition debt. It also permanently treats certain mortgage insurance premiums on acquisition indebtedness as qualified residence interest.

Miscellaneous Itemized Deductions Eliminated – But Teachers Still Qualify 

Starting in 2026, most miscellaneous itemized deductions—like investment fees, unreimbursed business expenses, and tax prep costs—are permanently eliminated under the new tax law.

However, there’s a key exception: educator expenses are no longer treated as miscellaneous deductions. Instead, they’re now fully deductible for itemizers under a new rule that expands what qualifies. This includes a broader range of classroom supplies/activities and now covers coaches and sports staff as well.

New Limits on Charitable Deductions Starting in 2026 

The new tax law introduces two key changes for individuals who itemize charitable contributions:

New 0.5% AGI Floor: 

Starting in 2026, you can only deduct charitable contributions that exceed 0.5% of your adjusted gross income (AGI). For example, if your AGI is $100,000, only donations above $500 would count toward your deduction.

60% Limit Made Permanent: 

The rule allowing you to deduct up to 60% of your AGI for cash donations to qualified charities is now permanent. 

Charitable Deductions for Non-Itemizers 

New Limits on Charitable Deductions Starting in 2026, taxpayers who don’t itemize can deduct up to $1,000 ($2,000 for joint filers) in cash donations to qualified public charities. This new below-the-line deduction reduces taxable income.

Business Tax Provisions 

Immediate Expensing of Domestic R&D 

Businesses investing in domestic research and experimentation (R&E) are now able to deduct those expenses fully in the year they are incurred. This provision permanently reverses the TCJA’s former mandate requiring R&E costs to be amortized over multiple years. However, foreign R&E expenses must still be amortized over 15 years. In addition, taxpayers will have the ability to fully deduct the R&E costs capitalized under the TCJA, in either 1 or 2 years. Some small taxpayers will have the ability to retroactively deduct these costs. 

100% Bonus Depreciation Restored 

Bonus depreciation allows businesses to deduct the cost of eligible assets entirely in the year they are placed in service. Reinstated under the new law, this incentive encourages investments in property and equipment. This will begin for assets placed in service after January 19, 2025. 

Business Interest Deduction returns to EBITDA Based Limitation 

Starting in tax year 2025, the OBBBA restores the add-back for depreciation, amortization, and depletion when calculating Adjusted Taxable Income (ATI). This effectively reverts the interest deduction limitation to an EBITDA-based formula, rather than the more restrictive EBIT-based formula that applied from 2022 to 2024. 

Section 179 Deduction Limit Increased 

Small and mid-sized businesses benefit from an increase to the Section 179 expensing limit: 

  • New cap: $2.5 million
  • Phase-out threshold: $5 million

This makes it more feasible for businesses to invest in new equipment and software. 

Qualified Business Income (QBI) Deduction Made Permanent 

The 20% deduction for pass-through business income—such as sole proprietorships, partnerships, and S corporations—is now a permanent fixture, ensuring ongoing tax relief for small business owners.

Qualified Production Property – 100% expensing 

The bill allows businesses to claim a 100% first-year depreciation deduction for the adjusted basis of Qualified Production Property placed in service in the U.S. This applies to nonresidential real property used as an integral part of manufacturing, production or refining of tangible personal property. Construction must begin after January 19, 2025, and before Jan 1, 2029 and be placed in service before January 1, 2031. This means companies can fully expense the cost of eligible facilities in the year they are placed into service, significantly reducing taxable income. 

International Tax Changes 

Several significant changes to U.S. international tax rules will impact your business operations abroad starting in 2026.  

  • The Global Intangible Low-Taxed Income (GILTI) regime has been rebranded as Net CFC Tested Income (NeCTIe), with key modifications: the exclusion for a 10% return on tangible assets (QBAI) has been repealed, the Section 250 deduction has been reduced from 50% to 40%, and the allowable foreign tax credit has increased from 80% to 90%. These changes may increase your U.S. tax liability if your foreign subsidiaries hold significant depreciable assets.  
  • Foreign-Derived Intangible Income (FDII) regime is now called Foreign-Derived Deduction Eligible Income (FDDEI), with a reduced deduction rate of 33.34% (down from 37.5%), slightly raising the effective tax rate on qualifying export income.  
  • The OBBBA also increases the Base Erosion and Anti-Abuse Tax (BEAT) tax rate, reinstates Section 958(b)(4), simplifying controlled foreign corporation (CFC) determinations, and permanently extends the CFC look-through rule.  

For a more detailed discussion on these and other international tax provisions impacted by OBBBA, refer to our recent blog. These updates will require a fresh look at your international tax planning strategy to ensure continued tax efficiency and compliance under the new framework. 

Estate and Gift Tax Enhancements

The federal estate and gift tax exemption receives a permanent boost.  Starting in 2026, the basic exclusion amount will rise to $15 million per person, ($30 million for a married couple) indexed for inflation using 2025 as the base year. This change permanently eliminates the previously scheduled reduction under the 2017 Tax Cuts and Jobs Act (TCJA), which was set to take effect on January 1, 2026. The same increased exemption also applies to the generation skipping transfer (GST) tax exemption.  

Potential Impacts on Stakeholders 

Individuals and Families 

Families with children stand to benefit greatly from the expanded Child Tax Credit and increased standard deductions. Likewise, workers in industries with high tipping and overtime rates could see their taxable income decrease due to new deductions, providing some financial relief. 

Small Businesses and Entrepreneurs 

The permanency of the QBI deduction, along with increased Section 179 limits, incentivizes investments in equipment and future business growth. Immediate expensing of R&D costs also removes barriers for companies focused on innovation. 

High-Earners and Estate Planners 

For high-net-worth individuals, the expanded estate and gift tax exemptions present a critical opportunity to transfer wealth with reduced tax burdens. However, temporary provisions like the SALT deduction changes may have limited benefits for this segment.

Final Thoughts and Recommendations 

The 2025 Tax Act represents a substantial reshaping of the tax landscape for individuals, families, and businesses alike. To make the most of these changes: 

  • Review your tax strategy: Consult your tax professional to understand how specific provisions apply to you or your business.
  • Plan for temporary changes: Take advantage of new deductions, such as cash tips and overtime pay, while they’re available.
  • Leverage estate planning opportunities: High-net-worth individuals should act swiftly to utilize the increased exemptions before future legislative changes.

Navigating these updates can feel overwhelming, but understanding the key provisions to the tax act 2025 ensures you’re well-prepared to optimize your financial outcomes. Reach out to our experts at Wiss to strategize your tax planning under the OBBBA. 

Workforce Reduction and Its Impact on 401(k) Plans

Posted on by Michelle Antico

Employee turnover triggers a wave of issues for a company and its HR or People Operations department. Even 401(k) retirement plans — one of the most sought-after employee benefits — can be impacted when a substantial number of employees are involuntarily terminated by workforce reduction.

This can constitute a partial 401(k) plan termination where full vesting of the affected employees must occur to satisfy legal and regulatory requirements, yet partial terminations are often easy to overlook.

Identifying Partial 401(k) Terminations

An important part of 401(k) management is understanding how workforce reductions can affect the plan itself, as complete disqualification by the IRS workforce reduction plans is on the table when a partial termination goes unnoticed or is mishandled. 

According to IRS regulations, a partial 401(k) termination may occur upon the involuntary termination of 20% or more of employees who are plan participants at the beginning of the year. It’s likely that some of the employees will be fully vested, while others will not meet the plan’s requirements for 100% vesting of employer contributions. 

Employers, and HR or People Ops departments specifically, should monitor fluctuations in employee headcounts and watch for events that can trigger a large workforce reduction that, in turn, could result in a partial 401(k) termination.

However — and this is where confusion can occur — the 20% workforce reduction count is cumulative, can span more than one plan year, and can be triggered by events other than layoffs and plant closings, such as:

  • Business restructuring that decreases the size of the workforce. 
  • Amendments to the 401(k) plan where the number of eligible employee participants decreases.
  • Employee turnover for positions that are not expected to be replaced.

The IRS calculates the turnover rate using a specific formula: 𝑇R = 𝐴 / 𝑋 + 𝑌. TR means the turnover rate equals the number of participants who were terminated (A) divided by the number of participants at the end of the prior year plus any added during the plan year (X+Y).

For example, if 20 employees were terminated at a company that had 80 participants, the turnover rate would be 25%. 

If it appears that a company’s workforce has dropped or is expected to drop by 20% or more, employers, HR professionals, and plan administrators should closely scrutinize 401(k) plan documents and the laws and regulations governing such retirement plans.

Workforce Reductions and the 401(k) Plan 

Between the complexity of 401(k) plan regulations and vigorous IRS oversight, it’s crucial to understand that significant employee turnover and other workforce-related events can have an impact on retirement plan operations and forfeiture accounts.

If it is determined that a partial 401(k) termination occurred, employers must fully vest the affected employees regardless of plan requirements. For example, plan documents might require an employee to work six years to become fully vested in the employer’s contributions to the 401(k) plan.

A layoff occurs which includes employees with less than six years of service. The employer must vest these employees at 100%, in part because they were not given the opportunity to meet that six-year benchmark.

The same is true for other events, such as business restructuring and plan amendments that affect employee eligibility. 

Immediate vesting of a large number of departing employees could potentially create financial hardship for the business. The plan’s forfeiture accounts may be available to fund the vesting of employees without a significant immediate impact on cash flow. However, any required adjustments to vesting must occur whether the forfeiture accounts will cover the cost or not. 

It’s important to identify and plan for any event that could jeopardize the 401(k) plan. Failing to recognize a partial 401(k) plan termination is common, but companies can enhance their monitoring procedures and increase awareness.

Avoiding Partial Termination Missteps 

The IRS can completely disqualify a 401(k) plan if vesting is not handled properly after a partial termination. Consider the following best practices to help mitigate risk: 

  • Learn the rules. Rules and regulations surrounding partial terminations tend to be complex, consider consulting with an employee benefit plan professional or ERISA attorney to understand the rules.
  • Know your plan. Become familiar with plan document provisions related to partial plan terminations, vesting provisions and the use of forfeiture accounts.
  • Establish oversight policies and procedures. Monitor employee voluntary and involuntary terminations by the plan sponsor and management should be ongoing. Consider turnover trends during the plan year as well as across multiple years.
  • Document all terminations. It may be necessary to prove to the IRS whether a departure was voluntary or involuntary for the turnover calculation. The IRS may classify voluntary terminations as involuntary terminations if the employer cannot provide support for the nature of the employee’s departure.
  • Manage forfeiture accounts. The balance of the forfeiture account can include a variety of sources, including funds previously forfeited from participant accounts that are affected by a partial plan termination.  The funds in the forfeiture account may be needed to reinstate the accounts of the affected participants.
  • Correct vesting failures. The IRS offers the IRS Employee Plans Compliance Resolution Systems that can be used to correct this compliance failure.

Contact us today for more information on managing workforce reduction and ensuring compliance with 401(k) plan regulations.

Tax Strategies for Real Estate Families Under the OBBB

Posted on by Kristine Sinisi

The recently enacted “One Big Beautiful Bill” (OBBB) is reshaping the tax and planning landscape for high-net-worth (HNW) family real estate companies. With a mix of revived, expanded, and sunset provisions, this legislation carries significant implications for legacy-driven property owners.

Below is a practical advisory breakdown tailored for family offices, multi-generational partnerships, and privately held real estate groups.

Depreciation: 100% Bonus is Back, with Nuance

The OBBB restores 100% bonus depreciation for qualifying property placed in service after January 19, 2025. However, the treatment of in-progress development projects is key:

Transitional Rule

Projects with binding contracts or self-constructed assets commenced before January 19, 2025, may be eligible for a 100% bonus if placed in service after this date and proper documentation is provided. We anticipate receiving further guidance from the Treasury to understand how this will work.

Cost Segregation Relevance

For those with phased projects, cost segregation studies are crucial for identifying bonus-eligible components.

Advisory Note: Electing out of bonus depreciation may be wise in years where it would trigger unusable excess business losses (EBLs).

Excess Business Loss Limitations: A Speed Bump for Big Deductions

The OBBB makes the EBL limitation permanent. Currently capped at $500,000 (joint filers), any loss exceeding this is carried forward as an NOL.

Pros of Taking Depreciation:

  • Accelerates tax deferral
  • Converts passive cash flow into reinvestment capital

Cons:

  • Suspends deductions that can’t be used
  • Deferral timing may mismatch income realization

Strategy: Partial bonus elections or spreading depreciation over time optimize tax benefit without waste.

Qualified Opportunity Zones: Permanence Brings Planning Clarity

OBBB makes the QOZ program permanent:

  • Capital gains can continue to be deferred into QOZ Funds beyond 2026.
  • Rolling zone designations allow strategic long-term planning.
  • Rural-focused OZs get enhanced basis step-ups.

Planning Tip: OZs are now a viable long-term strategy for intergenerational planning, especially when aligned with low-basis asset sales.

45L and 179D Energy Incentives: Countdown to Sunset

  • Section 179D: Deductions sunset for projects started after June 30, 2026.
  • Section 45L: Residential credits expire for units placed in service after that same date.

Action Required: Fast-track eligible projects and lock in modeling and certifications to qualify before deadlines hit.

Estate Tax Exemptions: Higher and Permanent

The estate and gift tax exemption is increased to $15 million per individual (indexed), up from $10M, and made permanent.

What This Means:

  • More room for lifetime gifts of real estate or entity interests
  • Higher GST exemption promotes dynasty trust planning

Opportunity: Utilize current exemptions to transfer appreciated assets into trusts, benefiting from valuation discounts.

Business Interest Limitation: Favorable Shift to EBITDA

OBBB restores the interest limitation to 30% of EBITDA (vs. EBIT), significantly expanding deductibility for real estate businesses.

Implications:

  • Greater interest deductions enhance feasibility of debt-financed deals
  • May reduce the need for 163(j) real property trade-off election (which slows depreciation)

1031 Exchanges: Intact and Untouched

Despite past threats, Section 1031 remains fully available for real estate exchanges.

Implication: Continue to defer gains, rebalance portfolios, and build legacy wealth without triggering immediate taxes.

Qualified Business Income (QBI): 20% Deduction Made Permanent

The Section 199A deduction for qualified pass-through income is preserved indefinitely.

  • Applies to many rental real estate businesses
  • Requires trade/business qualification and wage/property thresholds

Tip: Aggregating entities may help satisfy limitations and maximize deduction.

Strategic Implications for Financing and Long-Term Planning

  • Tax Shield Enhancement: Bonus depreciation + interest deductibility = increased front-end tax sheltering
  • Portfolio Timing: Consider staging income and loss recognition to navigate EBL and QBI thresholds
  • Estate Planning Alignment: Utilize high exemptions while leveraging ongoing QOZ, 1031, and stepped-up basis rules

Conclusion

The One Big Beautiful Bill is a powerful tailwind for tax-conscious real estate families. But every opportunity is nuanced: bonus depreciation can backfire without EBL coordination; interest deductibility may shift depreciation elections; and green tax credits are in decline. The overarching theme? The strategic integration of tax law, financing, and estate planning is more crucial than ever.

Now is the time to re-model projections, revisit entity structures, and meet with advisors to align your strategy with the new landscape.

2026 Tax Law Changes: Key Impacts on GILTI, FDII, and BEAT

Posted on by Kristine Sinisi

The “One Big Beautiful Bill” (OBBBA) became law on July 4, marking the most significant overhaul to US tax law since the Tax Cuts and Jobs Act of 2017. For businesses with international operations and high-net-worth individuals, these 2026 tax law changes will reshape tax planning strategies and compliance requirements starting in 2026. 

The new law introduces modifications to existing international tax regimes, including changes to the Global Intangible Low-Taxed Income (GILTI) rules, Foreign-Derived Intangible Income (FDII) deductions, and the Base Erosion and Anti-Abuse Tax (BEAT). Understanding these changes is essential for making informed decisions about your tax strategy. 

This analysis examines the most impactful modifications and their implications for your business operations and tax obligations. 

GILTI Regime Changes 

The modifications to the GILTI regime  will impact how multinational corporations calculate and report their international income. 

Simplified Calculation Process 

The legislation eliminates the qualified business asset investment (QBAI) reduction benefits that currently allow taxpayers to reduce their GILTI exposure. This removes a key mechanism for reducing international tax liability but also simplifies the calculation process. 

The law introduces a fundamental change in terminology and calculation. Instead of including GILTI, taxpayers will include their net CFC tested income (NCTI). Beginning after December 31, 2025, the percentage deductions related to NCTI inclusion will be reduced to 40%. This translates to an effective tax rate on NCTI of between 12.6% and 14%. 

Foreign Tax Credit Adjustments 

The new law reduces the current 20% haircut for foreign income taxes deemed paid with respect to NCTI inclusion to 10%. This provides some relief by allowing taxpayers to claim a greater portion of their foreign tax credits. 

However, the legislation introduces a new 10% disallowance for taxes paid on distributions of NCTI previously taxed earnings and profits. This creates a balancing effect that requires careful consideration in tax planning. 

FDII Deduction Updates 

The Foreign-Derived Intangible Income (FDII) deduction includes modifications that affect how domestic corporations benefit from their international activities. 

Enhanced Benefits 

The new law allows a deduction of 33.34% of the corporation’s entire foreign-derived deduction eligible income (FDDEI). This results in an effective tax rate of 14% on FDDEI, providing a competitive advantage for domestic production and international sales and services. 

Similar to the GILTI changes, the FDII modifications eliminate the impact of a corporation’s QBAI, thereby reducing complexity in the current system. 

Property Exclusions 

The legislation excludes income or gain from the sale or disposition of intangible property or any other property subject to depreciation, amortization, or depletion. This exclusion focuses the FDII benefit on operational income rather than asset dispositions. 

BEAT Rate Changes 

The Base Erosion and Anti-Abuse Tax faces modifications that will impact large corporations with substantial related-party transactions. 

Increased Tax Rates 

The new law increases the BEAT rate to 10.5% for most taxpayers, with a higher rate of 11.5% for certain banks and securities dealers. This represents a substantial jump from current rates and could significantly impact companies subject to BEAT. 

Credit Treatment Modifications 

The legislation repeals the scheduled 2026 tax law changes in the treatment of certain tax credits, providing certainty for taxpayers who were planning around the previously scheduled modifications.  

Additional International Provisions 

The legislation includes several other international tax provisions that provide stability and clarity: 

  • Modifies source rules for manufactured inventory sales, allowing up to 50% of income from sales of inventory produced in the US and sold through a foreign office or fixed place of business to be treated as foreign-source income. 
  • Permanently extends the CFC look-through rule of section 954(c)(6), eliminating uncertainty surrounding this rule’s periodic renewals 
  • Reinstates Section 958(b)(4), which restricts the downward attribution of stock ownership from foreign persons to US persons 
  • Eliminates the option for specified foreign corporations to use a one-month deferral taxable year 

Planning for Implementation 

With the new law now finalized, businesses have time to prepare for the changes that will take effect in 2026. Consider conducting a comprehensive review of your international structure to identify potential impacts from these modifications.  

This analysis should include modeling the effects on your effective tax rates, foreign tax credit utilization, and overall compliance requirements. The key areas to focus on include: 

  • Calculating the impact of revised GILTI/NCTI rules on your international subsidiaries 
  • Evaluating FDII benefits for your domestic operations with international sales 
  • Assessing BEAT exposure under the new higher rates 

Take Action Now 

The new international tax rules will fundamentally change how multinational businesses approach their tax strategy. Starting your analysis now, rather than waiting until the 2026 tax law changes, gives you the best opportunity to minimize disruption and maximize benefits from the new rules. 

Working with experienced international tax professionals can help you navigate these complex changes and develop strategies that position your business for success under the new law. The comprehensive nature of these modifications requires careful planning and implementation to ensure compliance and optimize your tax position. 

Consider scheduling a consultation to evaluate how these changes specifically impact your business structure and develop a tailored strategy for the new tax landscape.