As the calendar turns toward year-end, CPAs face critical decisions about depreciation, capital expenditures, and timing. Mistiming a purchase or misapplying bonus depreciation can cost clients real dollars. In this post, we walk through current best practices for depreciation and asset purchase strategies — and show how using Hive Tax’s AI tax research and planning tools can boost your speed, confidence, and value to clients. Read on to sharpen your year-end playbook and see how AI tax planning is reshaping advisory services.
Why Year-End Planning Matters (Especially in 2025)
Year-end is always a pressure point, because depreciation and fixed asset timing can meaningfully shift taxable income. ▶ Many businesses accelerate deductible expenses or push out income to optimize current-year results.
But tax law changes and evolving depreciation rules add layers of complexity. For example:
- Section 179 and bonus depreciation changes under recent legislation now allow for more aggressive expensing for qualifying assets.
- Bonus depreciation rules remain sensitive to placed-in-service timing and acquisition dates.
- The risk of mid-quarter convention applying (if > 40 % of purchases occur late in year) can reduce first-year depreciation.
Because of these shifting dynamics, a proactive and precise approach is essential. And that’s where an AI-driven tax research and planning tool can give CPAs a competitive edge.
Key Depreciation & Asset Purchase Strategies for Year-End
Below is a structured playbook you can run through with clients in Q4:
1. Prioritize Qualifying Assets for Section 179 & Bonus Depreciation
- Under recently updated rules, Section 179 deduction limits and phase-out thresholds have been increased, giving more leeway for immediate expensing.
- Bonus depreciation (100%) is again available for qualifying property acquired and placed in service after January 19, 2025.
- But care is needed: if acquisition or placed-in-service dates fall outside the “window,” the applicable bonus rate may drop.
- Always check state conformity (some states don’t conform to federal bonus or Section 179 rules).
Action tip for year-end: For planned asset purchases, map whether they qualify for Section 179, bonus, or must follow standard MACRS depreciation. Use timing sensitivity (i.e. getting them placed in service before year-end) to maximize first-year deductions.
2. Watch and Avoid the Mid-Quarter Trap
If more than 40 % of a taxpayer’s depreciable asset basis is placed in service in the last quarter, the mid-quarter convention kicks in, reducing first-year deduction.
As year-end approaches, run a “test run” of how much is placed-in-service late in the year. If you’re close to the 40 % threshold, consider shifting some acquisitions earlier in the year (if possible) or staging the additions across calendar years.
3. Leverage Cost Segregation (Especially for Real Property)
Performing a cost segregation study can reclassify components of a building (e.g. lighting, HVAC, finishes) into shorter life classes, accelerating depreciation.
Even older buildings may benefit from “catch-up” adjustments when segregation is done late, allowing the taxpayer to capture depreciation that was previously missed.
4. Select Depreciation Methods Mindfully
While MACRS is standard, accelerated methods like double declining balance or sum-of-the-years’ digits may be optimal for assets with faster functional obsolescence.
Ensure that the method matches the economic consumption pattern. Also consider switching to straight-line at the “crossover” point when it becomes more tax-efficient.
5. Monitor Grouping, Pooling, and Asset Classification
Grouping similar assets under a general asset account can simplify management. However, watch out for mixing incompatible assets (e.g. listed property) or misclassification that could lead to disallowed deductions.
For example, software vs equipment vs real property components: classify carefully so that each gets the best treatment.
6. Time Disposals, Retirements & Write-Offs
If a client is retiring or selling old equipment, the timing of disposal can generate recapture or salvage gains. It may be preferable to dispose before year-end or after, depending on income timing.
Also, cleaning up dead assets from fixed-asset registers and removing fully depreciated items can simplify future calculations.
7. Consider Income Projections & Bracket Management
If a client anticipates being in a higher bracket next year, you might prefer deferring depreciation or delaying purchases to maximize deduction value in a higher tax year. Conversely, when anticipating higher income this year, push deductions aggressively into the current year.
How Hive Tax’s AI Tools Supercharge the Process
Implementing the strategies above requires staying abreast of rules, verifying facts, and modeling outcomes fast. That’s precisely where Hive Tax’s AI tax research and planning tools shine.
AI Tax Research: Instant, Contextual, Cited
Hive Tax’s AI can interpret free-form tax queries, check federal & state code, and return results with authoritative citations — all in seconds.
Instead of spending hours hunting through IRS publications, Treasury regulations, and court cases, you can get precise guidance on depreciation subtleties (for example, whether a particular asset qualifies for bonus or if mid-quarter rules apply in a given scenario).
AI Planning & Return Analysis: Model, Compare, Recommend
Hive’s tax planning assistant lets you upload a client’s return or data and generate scenario-based depreciation and asset strategies.
The AI will calculate potential savings, compare options (e.g. Section 179 vs bonus), and produce reports you can present directly to clients (with your branding).
It also retains memory across the year, enabling proactive mid-year adjustments.
⏱ Efficiency + Quality + Confidence
By automating research and modeling, you free up time to focus on advisory value. The AI references real sources, so you still maintain your professional review and oversight. Hive Tax effectively augments your capacity to deliver high-quality depreciation planning at scale.
Sample Year-End Workflow With Hive + Your CPA Process
- Compile planned asset purchases and retirements (current pipeline).
- Run AI query: “Qualifies for bonus depreciation if placed in service by 12/31/2025?” or “Does mid-quarter apply if $500K of $1M placed in Q4?”
- Upload client return & anticipated purchases into Hive’s planning module.
- Review alternative depreciation strategies generated (e.g. Section 179 expense, bonus, MACRS) with AI’s dollar-savings comparisons.
- Adjust purchase timing or staging based on AI-recommended strategies.
- Document all decisions (with references) and include AI-based comparison charts in your client deliverable.
Timing Is Everything — Start Now
Given tax year-end deadlines, don’t wait until December. Start evaluating client eligibility and asset plans today. Some key “checkpoints”:
- By early Q4: run AI-based modeling to flag at-risk clients (e.g. ones near mid-quarter threshold).
- By mid-Q4: verify acquisition vs placed-in-service dates; flag assets that just miss the window.
- Late Q4: finalize purchase execution, disposal decisions, or deferral strategies.
With the right combination of tax insight and AI acceleration, you can turn year-end into an opportunity instead of a panic.
Final Thoughts & Call to Action
Depreciation and fixed-asset timing remain among the most powerful levers in year-end tax planning — but they’re also areas rife with nuance and legislative risks. As CPAs look to scale advisory services and deliver deeper value, integrating an AI tax research / planning tool is no longer optional — it’s a differentiator.