The One Big Beautiful Bill Act: A Financial Reporting Perspective for Private Businesses

Financial Reporting Implications Under U.S. GAAP

Under ASC 740 – Income Taxes, entities are required to recognize and measure deferred tax assets and liabilities based on enacted tax laws. As a result, the provisions of the OBBBA must be reflected in financial statements in the period in which the law was enacted, including interim reporting where applicable.

Privately held companies should expect changes in temporary differences, valuation allowances, and effective tax rates, particularly where accelerated deductions or expensing elections are adopted.

Key Provisions Affecting Financial Reporting

Bonus Depreciation and Section 179 Expensing

The reinstatement of 100% bonus depreciation and expanded Section 179 expensing limits may accelerate tax deductions relative to book depreciation. While these provisions can improve near-term cash flow, they may also result in increased deferred tax liabilities that must be recognized and carefully documented.

Research and Development Expensing

The return to immediate expensing of domestic R&D costs reduces prior amortization requirements and may eliminate certain deferred tax assets. However, it may also generate net operating losses, requiring a reassessment of valuation allowances and realizability assumptions.

Business Interest Expense Limitations

Changes to the calculation of adjusted taxable income for interest deductibility may affect existing interest carryforwards. These changes can alter deferred tax balances and require updated projections to support recoverability.

Timing and Disclosure Considerations

For calendar-year entities, the effects of the OBBBA should be evaluated for interim and annual financial statements, including:

• Remeasurement of deferred tax balances
• Reassessment of valuation allowances
• Updated disclosures related to significant judgments and estimates

Early coordination between tax, accounting, and audit teams is essential to ensure accurate application and consistent documentation.

Moving Forward

Finance leaders should consider proactive scenario analysis, enhanced documentation, and early engagement with advisors to address the Act’s implications comprehensively.

At Akram, we continuously track legislative changes and their implications for financial reporting, valuation, and audit readiness. Take control of how the OBBBA impacts your business—contact our tax specialists today for a personalized assessment and strategic guidance.