Question: A sole proprietor, Jennifer, purchased a laptop for her company for $2,500 in December 2024 but did not place it in service until January 2025. She also purchased office furniture for her company for $3,200 in January 2025 and placed it in service in February 2025. She would like to deduct the full cost of both items on her 2025 return. Can she elect §179 for both purchases?

Answer: Yes. Jennifer can elect to take the §179 deduction for both purchases on her 2025 return, Form 1040, Schedule C, Profit or Loss From Business, Line 13, Depreciation and Section 179 expense deduction.

Placed in service rule:

For §179 expense, the deduction is available in the year the property is placed in service, not the year it is purchased per Reg. §1.179-4(a).

• The laptop was bought in December 2024 but was not placed in service until January 2025.
• The office furniture was both purchased and placed in service in 2025.

Qualified property:

Both items meet the §179 qualified property requirements:

• Tangible personal property used in a trade or business
• New or used property is eligible (as long as it’s new to Jennifer)

Election process:

Jennifer can elect §179 for both items on her 2025 tax return by:

• Filing Form 4562, Depreciation and Amortization (Including Information on Listed Property) with the 2025 return
• Listing both items in Part I and electing the cost to expense

Dollar limits:

Based on the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, the §179 deduction limitation for 2025 is $2.5 million, and the phaseout begins dollar for dollar at $4 million. The §179 expense deduction is eliminated at $6.5 million.

The sale of U.S. real estate by a nonresident alien (NRA) involves more than just a standard closing statement and Form 1099-S. Thanks to the Foreign Investment in Real Property Tax Act (FIRPTA), tax professionals must navigate a complex withholding regime designed to ensure the IRS collects tax on gains from U.S. real property interests (USRPI) before the seller leaves the table and, potentially, the country.

Why FIRPTA exists

Under IRC §§897 and 1445, gain from a foreign seller’s disposition of a U.S. real property interest (USRPI) is treated as effectively connected income (ECI) and taxed at graduated rates, unlike FDAP income, which is generally taxed at 30% on a gross basis.

FIRPTA’s withholding is the IRS’s collection mechanism at the moment of sale, not the final tax. The buyer (transferee) is the withholding agent and is personally liable if the right amount isn’t withheld and remitted on time. Within 20 days of the transfer, the buyer must file Form 8288 and transmit the withholding and prepare Form 8288-A for each foreign transferor. The stamped Copy B of Form 8288-A is later attached to the seller’s Form 1040-NR to claim the credit.

What counts as a USRPI?

Under §897, a USRPI includes more than just land and buildings:

• Raw land and permanent structures
• Unsevered natural products (timber, minerals)
• Improvements and associated personal property used in real property activities (e.g., farming equipment)
• Certain ownership interests in U.S. corporations holding real property

Exclusions apply, such as publicly traded stock, certain foreclosure acquisitions and property that is not a USRPI at the time of disposition.

How much to withhold when selling?

The default FIRPTA rate is 15% of the “amount realized.” That term includes (i) cash paid, (ii) the fair market value of other property transferred, and (iii) any liability the buyer assumes or to which the property remains subject immediately before and after the transfer. When U.S. and foreign persons own property jointly, allocate the amount realized in proportion to each transferor’s capital contribution.

Reduce rates and exceptions

• Residential use, ≤ $300,000 purchase price: no withholding
• Residential use, > $300,000 up to $1,000,000: 10% withholding
• Nonrecognition transactions (e.g., qualifying §1031 exchanges), publicly traded interests, certain foreclosure/repo scenarios, or a valid non-foreign affidavit can eliminate or reduce withholding when their conditions are met

Practitioner tip: The buyer determines whether the residence-based exceptions apply; other relief (like a withholding certificate) is supported by the seller’s statement and IRS approval.

Withholding vs. actual tax

FIRPTA withholding is computed on the gross amount realized, but the foreign seller’s actual tax is computed on net gain and reported on Form 1040-NR. It’s common for the final liability to be less than the amount withheld, especially for long-term holdings, so the seller often receives a refund after filing. For 2018–2025, long-term capital gains are taxed at 0%/15%/20% brackets; many NRA real estate gains ultimately fall at 15% or 20%.

Example:

Viana, who is a resident and citizen of Paraguay, sells a real estate property for $500,000 with a $300,000 basis. FIRPTA withholding is generally $75,000 (15% x $500,000). The long-term capital gain tax is computed on the $200,000 gain, resulting in a $45,000 tax. The seller recovers the $30,000 difference by filing Form 1040-NR with the stamped Form 8288-A.

If withholding exceeds the actual tax liability, the excess is refunded but only after the return is processed.

Forms and deadlines

The buyer, as withholding agent must:

• File Form 8288 and transmit the withheld funds to the IRS within 20 days of closing
• Prepare Form 8288-A for each foreign seller and attach copies to Form 8288
• Give the IRS the seller’s TIN (or ITIN)
  • Without it, the IRS won’t issue the stamped Form 8288-A needed for the seller to claim the credit on their return

The seller uses Form 1040-NR to report the sale, compute gains and reconcile the withholding amount. If more was withheld than the actual tax liability, the seller receives a refund.

FIRPTA and §1031 like-kind exchanges

FIRPTA applies even when the sale is part of a like-kind exchange. For foreign sellers, the challenge is that liquidity withheld funds may not be released in time to reinvest.

Example:

Frank, a French citizen, sells a U.S. rental property for $1 million. His buyer must withhold $150,000 under FIRPTA. Frank plans a §1031 exchange, but unless the IRS approves his Form 8288-B before the replacement property closes, those funds won’t be available. To preserve full deferral, Frank might deposit $150,000 of his own funds with the settlement agent to cover the withholding, allowing the full $1 million to go to the qualified intermediary.

NOTE: FIRPTA still applies even if the sale is part of a §1031 exchange. If 15% of the gross price is withheld, the seller may not have enough cash to fully fund the replacement property purchase. (This is where planning comes to play its part for your client).

Rentals before sale §871(d)

This §871(d) is very important, if the NRA rented the property before selling, consider the §871(d) election to treat U.S. rental income as effectively connected income (ECI). This allows deductions for expenses (mortgage interest, taxes, depreciation). Without the election, §874(a) can bar those deductions, and rent is taxed as FDAP at 30%.

Avoid these common mistakes in real estate FIRPTA

• Using the title company’s info instead of the buyer’s on FIRPTA forms
• Failing to remit withholding within the 20-day deadline
• Filing an incomplete Form 8288-B (missing TINs, contracts, or calculations)
• Refunding withheld funds to the seller before IRS approval
• Forgetting to attach the stamped Form 8288-A to the seller’s 1040-NR

Bottom line

When a foreign seller disposes of U.S. real estate, FIRPTA can hold back thousands of dollars at closing. The key for tax professionals is early planning, correcting the calculation of the amount realized, proper use of exceptions and timely filing of forms. Done right, FIRPTA compliance keeps the deal on track and maximizes the seller’s eventual refund.

The One Big Beautiful Bill Act (OBBBA) reshaped many parts of the tax and health coverage landscape, and one of the areas most affected is the Affordable Care Act (ACA) Marketplace. For tax professionals, these changes matter because clients relying on Marketplace plans for coverage will see significant shifts in how they enroll, pay and remain insured.

Understanding these new rules allows tax pros to guide clients with both compliance and practical planning. Let’s walk through the major changes and their ripple effects.

No automatic enrollment

One of the most significant marketplace changes under OBBBA is the end of automatic reenrollment for individuals who qualify for premium tax credits. In the past, many self-employed taxpayers or lower-income clients who received subsidies could simply allow their coverage to roll over each year. Now, those taxpayers must actively verify their eligibility for credits annually. This may sound like a minor adjustment, but it introduces additional paperwork and creates the risk of losing subsidies if deadlines are missed.

For tax professionals, it means reminding clients each fall that failing to update their information could result in higher premiums or even a complete lapse in coverage.

Premium tax credit decreases

Another major impact is the reduction in the scope of premium tax credits. The OBBBA trims the available assistance, meaning Marketplace enrollees will likely face higher out-of-pocket costs. Families who had relied on generous subsidies to make coverage affordable will feel the pinch first. For tax pros, this shift affects household budgeting and how clients calculate their premium tax credit on Form 8962 at tax time.

Pro tip: Advising clients to set aside funds or prepare for higher monthly insurance premiums becomes part of year-round tax planning.

Enrollment woes

The Marketplace, once designed to be accessible and streamlined, now has more complicated requirements that could discourage sign-ups. Millions of people who currently benefit from subsidized coverage risk losing access altogether.

For tax professionals, this means more clients showing up with questions about alternatives, whether that’s employer coverage, short-term plans, or navigating penalties and exceptions if they go uninsured.

Business health care changes

These coverage changes don’t just affect individual taxpayers; they carry broader consequences for small businesses and their employees. Small businesses that do not offer employer-sponsored health insurance often rely on the ACA Marketplace to give their workers affordable options. As Marketplace subsidies shrink, those employees could lose coverage or be priced out of plans. Employers may then face new pressures to provide group coverage, which can be costly and complicated.

Pro tip: If you’re advising small business owners, this is an opportunity to model the cost of offering group health benefits versus the potential turnover risk if employees lose coverage.

Got medical bills?

Beyond small businesses, the OBBBA has ripple effects across the health care system. Hospitals and clinics anticipate more uninsured patients, especially in rural or underserved communities. When more individuals lose coverage, uncompensated care rises. That burden often shifts to state governments and health care providers, straining budgets and limiting resources. While this might feel distant from tax preparation, the reality is that clients who lose coverage often face unexpected medical bills.

Proactive planning includes helping clients understand the tax implications of medical debt, deductions, or even the impact on credit eligibility.

Self-employed health deductions

For years, many entrepreneurs have counted on Marketplace insurance to cover them while building their businesses. With the OBBBA changes, they now face both the administrative challenge of re-verifying premium tax credits and the financial strain of reduced subsidies.

Tax professionals working with sole proprietors and gig workers can highlight the self-employed health insurance deduction and explore strategies for smoothing out cash flow so clients can keep up with rising premiums.

What are your next steps?

• Increase client communication. Don’t wait for clients to discover lost subsidies or coverage gaps. Proactively explain the changes and encourage them to log in to their Marketplace accounts each year to confirm eligibility.
• Review projections during year-end planning sessions. If premium tax credits are shrinking, clients may need to adjust estimated tax payments or prepare for reconciliation at filing time.
• Explore all available deductions and credits. These can help your clients offset rising health care costs, from the medical expense deduction to health savings account contributions where eligible.

The OBBBA reminds tax professionals that they operate at the intersection of policy and real life. Marketplace changes aren’t abstract; they affect whether families can afford coverage, whether small businesses can compete for workers, and how self-employed individuals protect themselves against unexpected medical costs. By staying informed and proactive, you can confidently help clients navigate this new reality.