Accounting
Trump hails tariffs as economy barrels into trade wars
President Donald Trump took the lectern Tuesday for his primetime address beset by warning signs about the U.S. economy, and acknowledged to Americans there could be more discomfort ahead.
Trump defended his plan to remake the world’s largest economy through the biggest tariff increases in a century, saying it would raise “trillions and trillions” in revenue and rebalance trading relationships he called unfair. He cast the economic pain the levies are expected to cause in the form of higher prices as a “little disturbance” the nation ought to be able to overcome.
“Tariffs are about making America rich again and making America great again. And it’s happening, and it will happen rather quickly,” he said. “There’ll be a little disturbance, but we’re OK with that. It won’t be much.”
For large swaths of his record-setting 100-minute joint address to Congress on Tuesday night, though, Trump preferred to spend time on issues he sees as his political strengths. He hammered topics like transgender rights, migrant crime and diversity, equity and inclusion, and said relatively little about consumer prices.
The president proclaimed he was leading a “common-sense revolution,” saying “our country will be woke no longer.”not supported.
Trump turned to inflation only after a 19-minute opener. He blamed high prices for eggs and other goods on his predecessor, Joe Biden, and offered few new ideas to lower costs.
Some of his proposals at times sounded like magical solutions, including complex energy projects that could take years to complete and using savings from Elon Musk’s cost-cutting campaign, which have amounted to a small fraction of the federal deficit, to help pay down the debt.
The speech came at a pivotal moment. The president’s approval rating, which was positive in the weeks after his November election victory, has gone underwater in a series of polls. Data shows new strains on the economy as factory activity stagnates, inflation simmers, consumer confidence ebbs, and stocks lag behind equity markets in other countries.
Hours before he spoke, the S&P 500 Index closed at its
U.S. stock futures pointed to a turnaround on Wednesday, partly tied to Commerce Secretary Howard Lutnick saying the administration was already
An effort to disrupt Trump’s address by Democratic Representative Al Green was drowned out by Republican jeers and the lawmaker was escorted out of the chamber. Other Democrats held up signs with slogans such as “Musk Steals” and “False,” that were mocked on social media.
“I could find a cure to the most devastating disease,” Trump replied. “And these people sitting right here will not clap.”
In the face of challenging events, he has often resorted to his showmanship and ability to command the nation’s attention to avoid political damage.
Trump highlighted the heart-wrenching stories of invited guests, including freed American hostages. A 13-year-old boy diagnosed with cancer with ambitions of becoming a police officer was made a Secret Service agent by the agency’s director and Trump told a high school senior that he had earned admission to the US Military Academy at West Point.
Border security
He touted his immigration and border policies, which have ramped up deportations of undocumented migrants and designated Mexican cartels and other foreign gangs as terrorist organizations. He called on Congress to pass additional funds for border security.
But similar to the economy, the campaign promises that Trump made during the 2024 election have collided head-on with the realities that he’s confronted back in the White House. Inflation is tough to tame and wars are difficult to resolve.
On the world stage, the president sought to cast himself as a peacemaker, even as he boasted about withdrawing the U.S. from international institutions. He praised Ukrainian President Volodymyr Zelenskiy for saying he would accept a natural resources deal that was scuttled last week after a disastrous meeting at the White House, while reiterating his demand for an end to the conflict and expressing reservations about continued U.S. military aid to Kyiv.
Trump spoke just hours after hitting Canada and Mexico — the nation’s largest trading partners — with the new tariffs and doubling levies on Chinese imports to 20%. While those moves are aimed at boosting domestic jobs and production in his vision for a “golden age of America,”
Trump reiterated his threat to impose 25% tariffs on aluminum and steel and to put in place reciprocal tariffs on all countries with barriers to American imports, saying that the U.S. had been “ripped off for decades by nearly every country on Earth, and we will not let that happen any longer.”
“Whatever they tariff us, we tariff them,” Trump said. “Whatever they tax us, we tax them. If they do non-monetary tariffs to keep us out of their market, then we do non-monetary barriers to keep them out of our market.”
Trump touted his tariff moves as more effective at bringing jobs to the U.S. than Biden’s efforts, which included the Chips and Science Act and its billions in subsidies to spur domestic semiconductor manufacturing. Trump urged lawmakers to eliminate the Chips Act and said he would not give chipmakers any more funds from the law.
Separately, Trump announced plans to establish an office of shipbuilding at the White House. And he said he had spoken to the heads of the three largest U.S. automakers Tuesday before his speech. Car companies are particularly concerned that the tariffs on Mexican and Canadian goods could ratchet up prices even on vehicles assembled in the U.S.
Trump is casting his bid to spur domestic energy production as an antidote for inflation. Yet he has yet to implement potential policies that could encourage more domestic oil demand or lower the costs of energy production. And even so, it’s not clear the oil industry will go along. Oil executives who suffered huge losses from collapsing energy prices during the coronavirus pandemic have shown little appetite to dramatically bolster output as they focus on shareholder returns.
Even Trump’s bid to invigorate a long-stalled natural gas pipeline and export project in Alaska would take years to construct, delivering only limited dividends for American consumers, while supplying the fuel to residents inside the state and Asian allies abroad.
In his second term, Trump has moved rapidly to implement his policies with a stream of executive actions that are reshaping the U.S. government and its economic and security ties with the world.
Musk’s DOGE cuts
Musk, who is overseeing an effort to slash the federal government’s workforce and spending through the Department of Government Efficiency, was in the chamber and received a standing ovation from Republicans.
Those moves have led to consternation throughout Washington and concerns even from some Republicans over their scope. Democrats highlighted that wariness, with some lawmakers inviting former government workers who lost their jobs..
Trump gave a lengthy list of government programs and grants he cast as examples of waste, and reiterated previous claims — since walked back by other government officials — suggesting that Social Security was providing benefits to people hundreds of years old. Democrats frequently interjected to jeer the claims.
Trump’s appearance before Congress presented a crucial opportunity to press fellow Republicans on legislative action. The party is grappling with how to extend expiring tax cuts from Trump’s first term, approve additional benefits he promised during the campaign, and his calls to balance the budget.
“I’m calling for no tax on tips, no tax on overtime and no tax on Social Security benefits for our great seniors,” Trump said.
The American Institute of CPAs is asking leaders of the Senate Finance Committee and the House Ways and Means Committee to make changes in the wide-ranging tax and spending legislation that was
In a
“While we support portions of the legislation, we do have significant concerns regarding several provisions in the bill, including one which threatens to severely limit the deductibility of state and local tax (SALT) by certain businesses,” wrote AICPA Tax Executive Committee chair Cheri Freeh in the letter. “This outcome is contrary to the intentions of the One Big Beautiful Bill Act, which is to strengthen small businesses and enhance small business relief.”
The AICPA urged lawmakers to retain entity-level deductibility of state and local taxes for all pass-through entities, strike the contingency fee provision, allow excess business loss carryforwards to offset business and nonbusiness income, and retain the deductibility of state and local taxes for all pass-through entities.
The proposal goes beyond accounting firms. According to the
The AICPA argued that SSTBs would be unfairly economically disadvantaged simply by existing as a certain type of business and the parity gap among SSTBs and non-SSTBs and C corporations would widen.
Under current tax law (and before the passage of the Tax Cuts and Jobs Act of 2017), it noted, C corporations could deduct SALT in determining their federal taxable income. Prior to the TCJA, owners of PTEs (and sole proprietorships that itemized deductions) were also allowed to deduct SALT on income earned by the PTE (or sole proprietorship).
“However, the TCJA placed a limitation on the individual SALT deduction,” Freeh wrote. “In response, 36 states (of the 41 that have a state income tax) enacted or proposed various approaches to mitigate the individual SALT limitation by shifting the SALT liability on PTE income from the owner to the PTE. This approach restored parity among businesses and was approved by the IRS through Notice 2020-75, by allowing PTEs to deduct PTE taxes paid to domestic jurisdictions in computing the entity’s federal non-separately stated income or loss. Under this approved approach, the PTE tax does not count against partners’/owners’ individual federal SALT deduction limit. Rather, the PTE pays the SALT, and the partners/owners fully deduct the amount of their distributive share of the state taxes paid by the PTE for federal income tax purposes.”
The AICPA pointed out that C corporations enjoy a number of advantages, including an unlimited SALT deduction, a 21% corporate tax rate, a lower tax rate on dividends for owners, and the ability for owners to defer income.
“However, many SSTBs are restricted from organizing as a C corporation, leaving them with no option to escape the harsh results of the SSTB distinction and limiting their SALT deduction,” said the letter. “In addition, non-SSTBs are entitled to an unfettered qualified business income (QBI) deduction under Internal Revenue Code section 199A, while SSTBs are subject to harsh limitations on their ability to claim a QBI deduction.”
The AICPA also believes the bill would add significant complexity and uncertainty for all pass-through entities, which would be required to perform complex calculations and analysis to determine if they are eligible for any SALT deduction. “To determine eligibility for state and local income taxes, non-SSTBs would need to perform a gross receipts calculation,” said the letter. “To determine eligibility for all other state and local taxes, pass-through entities would need to determine eligibility under the substitute payments provision (another complex set of calculations). Our laws should not discourage the formation of critical service-based businesses and, therefore, disincentivize professionals from entering such trades and businesses. Therefore, we urge Congress to allow all business entities, including SSTBs, to deduct state and local taxes paid or accrued in carrying on a trade or business.”
Tax professionals have been hearing about the problem from the Institute’s outreach campaign.
“The AICPA was making some noise about that provision and encouraging some grassroots lobbying in the industry around that provision, given its impact on accounting firms,” said Jess LeDonne, director of tax technical at the Bonadio Group. “It did survive on the House side. It is still in there, specifically meaning the nonqualifying businesses, including SSTBs. I will wait and see if some of those efforts from industry leaders in the AICPA maybe move the needle on the Senate side.”
Contingency fees
The AICPA also objects to another provision in the bill involving contingency fees affecting the tax profession. It would allow contingency fee arrangements for all tax preparation activities, including those involving the submission of an original tax return.
“The preparation of an original return on a contingent fee basis could be an incentive to prepare questionable returns, which would result in an open invitation to unscrupulous tax preparers to engage in fraudulent preparation activities that takes advantage of both the U.S. tax system and taxpayers,” said the AICPA. “Unknowing taxpayers would ultimately bear the cost of these fee arrangements, since they will have remitted the fee to the preparer, long before an assessment is made upon the examination of the return.”
The AICPA pointed out that contingent fee arrangements were associated with many of the abuses in the Employee Retention Credit program, in both original and amended return filings.
“Allowing contingent fee arrangements to be used in the preparation of the annual original income tax returns is an open invitation to abuse the tax system and leaves the IRS unable to sufficiently address this problem,” said the letter. “Congress should strike the contingent fee provision from the tax bill. If Congress wants to include the provision on contingency fees, we recommend that Congress provide that where contingent fees are permitted for amended returns and claims for refund, a paid return preparer is required to disclose that the return or claim is prepared under a contingent fee agreement. Disclosure of a contingent fee arrangement deters potential abuse, helps ensure the integrity of the tax preparation process, and ensures compliance with regulatory and ethical standards.”
Business loss carryforwards
The AICPA also called for allowing excess business loss carryforwards to offset business and nonbusiness income. It noted that the One Big Beautiful Bill Act amends Section 461(l)(2) of the Tax Code to provide that any excess business loss carries over as an excess business loss, rather than a net operating loss.
“This amendment would effectively provide for a permanent disallowance of any business losses unless or until the taxpayer has other business income,” said letter. “For example, a taxpayer that sells a business and recognizes a large ordinary loss in that year would be limited in each carryover year indefinitely, during which time the taxpayer is unlikely to have any additional business income. The bill should be amended to remove this provision and to retain the treatment of excess business loss carryforwards under current law, which is that the excess business loss carries over as a net operating loss (at which point it is no longer subject to section 461(l) in the carryforward year).
AICPA supports provisions
The AICPA added that it supported a number of provisions in the bill, despite those concerns. The provisions it supports and has advocated for in the past include
• Allow Section 529 plan funds to be used for post-secondary credential expenses;
• Provide tax relief for individuals and businesses affected by natural disasters, albeit not
permanent;
• Make permanent the QBI deduction, increase the QBI deduction percentage, and expand the QBI deduction limit phase-in range;
• Create new Section 174A for expensing of domestic research and experimental expenditures and suspend required capitalization of such expenditures;
• Retain the current increased individual Alternative Minimum Tax exemption amounts;
• Preserve the cash method of accounting for tax purposes;
• Increase the Form 1099-K reporting threshold for third-party payment platforms;
• Make permanent the paid family leave tax credit;
• Make permanent extensions of international tax rates for foreign-derived intangible income, base erosion and anti-abuse tax, and global intangible low-taxed income;
• Exclude from GILTI certain income derived from services performed in the Virgin
Islands;
• Provide greater certainty and clarity via permanent tax provisions, rather than sunset
tax provisions.
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Accounting
Mid-year moves: Why placed-in-service dates matter more than ever for cost segregation planning
In the world of depreciation planning, one small timing detail continues to fly under the radar — and it’s costing taxpayers serious money.
Most people fixate on what a property costs or how much they can write off. But the placed-in-service date — when the IRS considers a property ready and available for use — plays a crucial role in determining bonus depreciation eligibility for cost segregation studies.
And as bonus depreciation continues to phase out (or possibly bounce back), that timing has never been more important.
Why placed-in-service timing gets overlooked
The IRS defines “placed in service” as the moment a property is ready and available for its intended use.
For rentals, that means:
- It’s available for move-in, and,
- It’s listed or actively being shown.
But in practice, this definition gets misapplied. Some real estate owners assume the closing date is enough. Others delay listing the property until after the new year, missing key depreciation opportunities.
And that gap between intent and readiness? That’s where deductions quietly slip away.
Bonus depreciation: The clock is ticking
Under current law, bonus depreciation is tapering fast:
- 2024: 60%
- 2025: 40%
- 2026: 20%
- 2027: 0%
The difference between a property placed in service on December 31 versus January 2 can translate into tens of thousands in immediate deductions.
And just to make things more interesting — on May 9, the House Ways and Means Committee released a draft bill that would reinstate 100% bonus depreciation retroactive to Jan. 20, 2025. (The
The result? Accountants now have to think in two timelines:
- What the current rules say;
- What Congress might say a few months from now.
It’s a tricky season to navigate — but also one where proactive advice carries real weight.
Typical scenarios where timing matters
Placed-in-service missteps don’t always show up on a tax return — but they quietly erode what could’ve been better results. Some common examples:
- End-of-year closings where the property isn’t listed or rent-ready until January.
- Short-term rentals delayed by renovation punch lists or permitting hang-ups.
- Commercial buildings waiting on tenant improvements before becoming operational.
Each of these cases may involve a difference of just a few days — but that’s enough to miss a year’s bonus depreciation percentage.
Planning moves for the second half of the year
As Q3 and Q4 approach, here are a few moves worth making:
- Confirm the service-readiness timeline with clients acquiring property in the second half of the year.
- Educate on what “in service” really means — closing isn’t enough.
- Create a checklist for documentation: utilities on, photos of rent-ready condition, listings or lease activity.
- Track bonus depreciation eligibility relative to current and potential legislative shifts.
For properties acquired late in the year, encourage clients to fast-track final steps. The tax impact of being placed in service by December 31 versus January 2 is larger than most realize.
If the window closes, there’s still value
Even if a property misses bonus depreciation, cost segregation still creates long-term savings — especially for high-income earners.
Partial-year depreciation still applies, and in some cases, Form 3115 can allow for catch-up depreciation in future years. The strategy may shift, but the opportunity doesn’t disappear.
Placed-in-service dates don’t usually show up on investor spreadsheets. But they’re one of the most controllable levers in maximizing tax savings. For CPAs and advisors, helping clients navigate that timing correctly can deliver outsized results.
Because at the end of the day, smart tax planning isn’t just about what you buy — it’s about when you put it to work.
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