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C Corp Planning (2025)

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OBBBA (7/4/2025) • 100% bonus dep • 174A expensing • 163(j) EBITDA • CAMT • QSBS • State decoupling

C Corp Tax Planning Report (2025): optimize for two systems at once—regular tax and CAMT

The One Big Beautiful Bill Act (OBBBA) rewired corporate tax planning: it restores aggressive expensing incentives (bonus depreciation and domestic R&E expensing) while leaving the Corporate AMT (CAMT) “book-income floor” in place. That creates a new reality: the best strategy isn’t “maximize deductions,” it’s “maximize deductions without tripping the floor.” :contentReference[oaicite:0]{index=0}

Jump to contents Start with the Jan 19 trap

Educational overview only — not legal/tax advice.

Contents

  1. Managing corporate tax liability: regular tax vs a new floor
  2. CAMT: who gets pulled in and why expensing can backfire
  3. Accounting methods: the 448(c) small business gateway
  4. Cost recovery: bonus depreciation, 179, QIP/QPP, cost seg
  5. R&D: 174A expensing, retroactive relief, and 41 credit interplay
  6. Leverage: 163(j) return to EBITDA + the 2026 capitalization trap
  7. NOLs: 80% cap strategy and deduction hierarchy
  8. QSBS: why C Corp status got more attractive post-7/4/2025
  9. State taxes: decoupling and the “three books” reality

1) Regular tax didn’t change—everything around it did

The headline corporate rate stays at 21%, but OBBBA narrows taxable income through permanent expensing incentives. The new planning imperative is to drive down regular taxable income while ensuring you don’t inadvertently create a CAMT liability that claws back the benefit. :contentReference[oaicite:2]{index=2}

2) CAMT: the “book-tax trap” that changes optimal behavior

CAMT imposes a minimum tax on Adjusted Financial Statement Income (AFSI) for “Applicable Corporations.” The trap: OBBBA deductions (bonus depreciation, 174A expensing) often reduce regular tax immediately but do not reduce book income at the same pace—so the regular tax drops while the AFSI-based minimum stays high. :contentReference[oaicite:3]{index=3}

Planning move: test applicability using the simplified method

The report highlights the optional interim simplified method for determining CAMT status in 2025—use it as an early warning system if you’re hovering near the threshold, before spending months rebuilding full AFSI adjustments. :contentReference[oaicite:4]{index=4}

3) Accounting methods: the 448(c) gross receipts gateway

For most corporations, the most important “eligibility test” is the Section 448(c) gross receipts threshold (inflation-adjusted). Falling under the limit can unlock cash-method flexibility and exemption from certain limitations—often via a Form 3115 method change that produces a favorable Section 481(a) adjustment. :contentReference[oaicite:5]{index=5}

4) Cost recovery: the return of 100% bonus depreciation (with a date trap)

OBBBA restores 100% bonus depreciation, but the effective date matters: assets acquired/placed in service after January 19, 2025 can qualify for 100%, while the “straddle period” at the start of the year can produce much lower deductions. Contracts signed before the effective date can also complicate “acquired” analysis under the binding contract rules. :contentReference[oaicite:6]{index=6}

Section 179 as a state-tax hedge

The report notes expanded Section 179 limits and a key tactical use: some states conform more closely to 179 than to bonus depreciation, so 179 can be a “state conformity lever” even when federal bonus is available. :contentReference[oaicite:7]{index=7}

Cost segregation is back

With 100% bonus restored, cost segregation reclassifications (5/7/15-year property) can produce very large current-year deductions, including catch-up via Form 3115 for prior acquisitions. :contentReference[oaicite:8]{index=8}

Special incentive: Qualified Production Property (QPP)

The report describes QPP as a major reshoring lever—allowing expensing for certain qualifying real property with specific “begin construction” and placed-in-service windows, which can materially change facility ROI modeling. :contentReference[oaicite:9]{index=9}

5) R&D reset: 174A domestic expensing returns—with relief paths

The report frames 174A as a structural incentive to onshore innovation: domestic R&E becomes currently deductible again (effective for tax years beginning after 12/31/2024), while foreign R&E remains subject to long amortization—forcing better cost tracing and time allocation. :contentReference[oaicite:10]{index=10}

Retroactive relief: small-business refund path vs “transition pile” for larger corps

The report highlights retroactive relief for qualified small businesses and procedural simplification via statement-in-lieu mechanics, while larger corporations manage unamortized 2022–2024 balances through acceleration or two-year spread choices—often coordinated with CAMT exposure. :contentReference[oaicite:11]{index=11}

6) Leverage unlocked: 163(j) returns to EBITDA—then tightens in 2026

OBBBA reverts the 163(j) ATI definition back to EBITDA for 2025, increasing interest deduction headroom for capital-intensive firms. But the report flags a 2026 “capitalization trap” where capitalized interest retains its character and stays inside the 163(j) limitation before capitalization rules apply—making 2025 a uniquely favorable year for certain structures. :contentReference[oaicite:12]{index=12}

7) NOLs: the 80% cap creates a deduction hierarchy

Even with large NOL carryforwards, the 80% limitation can leave cash tax in profitable years. The report emphasizes a practical ordering insight: current-year deductions (bonus/174A) are “full-strength,” while NOLs are capped—so generating current-year deductions can be more valuable than burning NOLs. :contentReference[oaicite:13]{index=13}

8) QSBS (1202): C Corp status got meaningfully more attractive after 7/4/2025

The report outlines QSBS enhancements: higher exclusion caps, higher asset thresholds, and tiered holding-period exclusions for stock issued after July 4, 2025. This changes exit modeling for founders, PE/VC, and certain roll-up structures—especially when paired with full expensing incentives that reduce operating cash taxes. :contentReference[oaicite:14]{index=14}

9) Multistate reality: decoupling means you’ll run “three books”

The report describes a widening gap between federal taxable income (OBBBA rules), financial statements (GAAP/IFRS), and state taxable income (conformity/decoupling patchwork). The operational consequence is heavy reconciliation work and estimated payment recalibration to avoid state underpayment penalties. :contentReference[oaicite:15]{index=15}

Practical control

Maintain a “conformity matrix” by state for bonus depreciation, 174A, and 163(j)—and update it as legislatures respond to revenue pressure. :contentReference[oaicite:16]{index=16}

Bottom line

2025 is a “liquidity year” for many C Corps—if you execute precisely. Time capex around the Jan 19 straddle, coordinate bonus/179/cost seg with state conformity, implement domestic-vs-foreign R&D tracking for 174A, and always run the CAMT parallel model before declaring victory. :contentReference[oaicite:17]{index=17}

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