The One Big Beautiful Bill Act (OBBBA) has officially become law, bringing sweeping changes to the tax landscape that will affect millions of Americans. As you navigate these new provisions, understanding how they impact your personal financial situation is crucial for making informed decisions in the months ahead. 

While the bill extends many popular Tax Cuts and Jobs Act provisions, it also introduces significant new deductions and eliminates several clean energy incentives. Let’s look at some of the more significant changes. 

Major opportunities for business owners and investors 

Sec. 1202 qualified small business stock exclusion enhancement 

One of the most significant opportunities in OBBBA involves enhanced tax benefits for qualified small business stock investments. The bill substantially increases the Section 1202 exclusion, which allows you to exclude gains from the sale of qualifying small business stock from your taxable income. 

For stock acquired after July 4, 2025 (stock acquired before 7/4/2025 remains under the old §1202 rules and you cannot rollover or exchange old stock into new stock to utilize this rule), the exclusion is now phased in by holding period (ranging from 3 to 5 years): 

• 3 years, 50% of gain may be excluded 
• 4 years, 75% of gain may be excluded 
• 5 years or more, 100% of gain may be excluded 
• Exclusion amount is also increased from $10 million (life time) to the greater of $15 million (life time) or 10x basis. 

The bill also increases the 1202 aggregate gross assets limit from $50 million up to $75 million, which will allow more small businesses to qualify their stock as eligible for the exclusion.  

This enhancement makes investing in qualifying small businesses significantly more attractive from a tax perspective and could influence your investment strategy if you’re considering opportunities in emerging companies. 

Core individual tax provisions 

Individual income tax rates become permanent 

OBBBA makes the individual tax rates established in 2017 permanent, providing long-term certainty for your tax planning.  The entire tax brackets of 10%, 12%, 22%, 24%, 32%, 35%, and 37% remained. 

Standard deduction increases take effect immediately 

The enhanced standard deduction amounts are now permanent and apply retroactively to 2025. For this tax year, you can claim: 

• $15,750 if you’re single 
• $23,625 if you’re head of household
• $31,500 if you’re married filing jointly 

These amounts will continue to be adjusted annually for inflation, providing predictable increases in future years. 

Auto interest deduction 

Up to $10K incurred in 2025 through 2028 to buy a passenger vehicle. The phase out for taxpayers with MAGI exceeds $100K (or $200K MFJ).   

Personal exemptions are eliminated, but seniors gain new deduction 

While personal exemptions remain permanently set at zero, OBBBA introduces a temporary $6,000 deduction for taxpayers age 65 and older. This senior deduction phases out when your modified adjusted gross income exceeds $75,000 ($150,000 for joint filers) and will be available from 2025 through 2028. 

Family-focused tax benefits 

Child tax credit expansion 

The child tax credit receives a meaningful boost under OBBBA. Starting in 2025, the non-refundable credit increases to $2,200 per child and will be indexed for inflation going forward. The $1,700 refundable portion becomes permanent and will also adjust for inflation, while income phaseout thresholds remain at the higher TCJA levels of $200,000 ($400,000 for joint filers). 

Estate and gift tax exemption increases 

OBBBA significantly raises estate and gift tax exemptions, permanently setting them at $15 million for individuals ($30 million for married couples) beginning in 2026. These amounts will be indexed for inflation, providing substantial estate planning opportunities for high-net-worth families. 

Deduction and credit modifications 

Alternative minimum tax exemption changes 

The bill makes the TCJA’s increased AMT exemption amounts permanent but modifies the phaseout mechanism. While exemption thresholds revert to 2018 levels indexed for inflation ($500,000 for single and $1 million for joint filers), the phaseout rate increases from 25% to 50% of the amount by which your alternative minimum taxable income exceeds the threshold. 

Mortgage interest deduction limitations become permanent 

The $750,000 limit on home mortgage acquisition debt for the mortgage interest deduction is now permanent. Additionally, the exclusion of home equity indebtedness interest from qualified residence interest also becomes permanent, and certain mortgage insurance premiums will qualify as deductible interest. 

Pease limitation replacement 

OBBBA permanently eliminates the traditional Pease limitation on itemized deductions but replaces it with a new structure for those above the 37% tax bracket. Your itemized deductions will be reduced by 2/37 of the lesser of your total itemized deductions or the amount of taxable income exceeding the start of the 37% tax bracket. 

Charitable deduction modifications 

The bill creates new charitable giving incentives while imposing some limitations. Non-itemizers can now claim up to $1,000 ($2,000 for joint filers) for charitable contributions. However, a new floor applies for itemizers after 12/31/25. Taxpayers can only deduct charitable contributions in an amount in excess of .5% of their adjusted gross income (AGI). The Act also made the 60% AGI limit for cash gifts to public charities permanent. 

$1,700 school choice credit 

The OBBBA creates a new tax credit which provides a nonrefundable credit for cash or marketable security donations made to 501(c)(3) organizations that provide scholarships for elementary and high school students.  

The credit would be taken instead of a charitable contribution deduction and would be reduced by any amount allowed as a credit on a state tax return up to $1,700 per taxpayer. This credit is a “non – refundable” tax credit and can carry forward for up to 5 years.  

New excise tax consideration 

Remittance transfer tax implementation 

OBBBA introduces a 1% tax on remittance transfers to foreign recipients, imposed on the sender for payments sent after 12/31/25. This affects transfers of cash, money orders, cashier’s checks, and similar instruments, though it excludes funds withdrawn from financial institution accounts or charged to credit/debit cards. 

If you regularly send money transfers, particularly internationally, this new tax will add to your costs and should factor into your financial planning. 

State and local tax developments 

SALT cap temporary increase 

One of the most anticipated provisions temporarily raises the state and local tax deduction limit to $40,000 (up from $10,000) with annual inflation adjustments through 2029. The cap reverts to $10,000 starting in 2030. 

However, the deduction phases down for taxpayers with modified adjusted gross income over $500,000, reducing by 30% of the excess but never falling below $10,000. 

PTET deduction preservation 

Importantly, OBBBA doesn’t include the proposed limitations on passthrough entity tax (PTET) workarounds that appeared in earlier versions. This means existing state-level strategies for circumventing the SALT cap through entity-level tax payments remain viable. 

Business-related provisions affecting individuals 

Sec. 199A QBI deduction enhancement 

The qualified business income deduction becomes permanent at the 20% rate and includes several improvements. The phase-in ranges for specified service businesses expand significantly ($75,000 non-joint, $150,000 joint), and a new minimum deduction of $400 applies for taxpayers with at least $1,000 of QBI from active trades or businesses where they materially participate. 

Excess business loss limitation permanence 

The limitation on excess business losses for non-corporate taxpayers, originally scheduled to expire after 2028, is now permanent. This affects your ability to use business losses to offset other income sources. 

Bonus depreciation and Sec. 179 expensing 

OBBBA makes 100% bonus depreciation permanent for property acquired and placed in service after January 19, 2025. Section 179 expensing limits increase to $2.5 million, reduced when qualifying property costs exceed $4 million. 

Sec. 163(j) business interest limitation 

The EBITDA limitation under Section 163(j) is reinstated for tax years beginning after December 31, 2024, which may affect your business interest deductions if you have significant debt-financed operations. After 12/31/2024, the Sec. 163j has modified the 30% of adjusted taxable income (ATI) calculation. ATI will be computed before the deduction for depreciation, amortization, or depletion, which increases the amount of business interest to be deducted. 

Clean energy incentive eliminations 

Residential clean energy credits 

Several clean energy incentives face elimination or significant restrictions: 

Sec. 25C energy efficient home improvement credit 

This credit terminates after December 31, 2025, so if you’re planning qualifying home improvements, you should complete them by year-end. 

Sec. 25D residential clean energy credit 

The credit for residential clean energy expenditures terminates for costs incurred after December 31, 2025, affecting solar panels, wind turbines, and other qualifying systems. 

Sec. 30D clean vehicle credit 

The popular electric vehicle credit terminates for vehicles acquired after September 30, 2025, significantly impacting the economics of EV purchases. 

Commercial clean energy impacts 

Sec. 45L new energy efficient home credit 

This credit for homebuilders terminates after June 30, 2026, which may affect new home pricing and availability of energy-efficient options. 

Sec. 45W commercial clean vehicle credit 

The credit for commercial clean vehicles terminates after September 30, 2025, affecting business vehicle purchase decisions. 

Planning considerations and next steps 

OBBBA’s provisions create both opportunities and challenges that require careful consideration of your individual circumstances. The temporary nature of some benefits, particularly the enhanced SALT deduction and senior deduction, suggests the importance of strategic timing for certain financial decisions. 

The elimination of clean energy credits may accelerate your timeline for qualifying purchases, while enhanced business provisions could influence investment and business structure decisions. The significant improvements to the Section 1202 exclusion particularly merit attention if you’re involved with or considering small business investments. 

Given the complexity of these changes and their interaction with your unique financial situation, working with qualified tax professionals becomes increasingly valuable for optimizing your tax position under the new law. 

Ready to navigate OBBBA’s impact on your tax situation? Contact BPM today to discuss how these changes affect your specific circumstances and develop strategies to maximize the opportunities while managing the challenges ahead. Our team can help you understand the implications and make informed decisions for your financial future. 

One of the first signs that a startup is reaching a new level of maturity is the need for a financial statement audit. Whether prompted by investor requirements, capital-raising goals, or the company’s evolving strategy, this milestone marks a pivotal transition as the business steps into a new stage of growth and opportunity. Audits can feel stressful, particularly if you haven’t navigated one before. However, there are steps you can take to ensure a smooth audit process. 

When a company undergoes an audit, external auditors will scrutinize a company’s financial statements to ensure compliance with accounting standards, such as US Generally Accepted Accounting Principles (GAAP).  While various month and year-end close accounting tasks can help prepare a company for some of the more standard audit sections and procedures, an often-overlooked gap exists in areas of Technical Accounting.  

What is technical accounting? 

Technical Accounting is a specialized field within accounting that focuses on complex accounting transactions and compliance with accounting standards. It involves applying advanced accounting knowledge and research to analyze guidance and apply it to specific facts and circumstances present in unique transactions. The work product is often in the form of draft memorandums and calculation workbooks to support conclusions for auditors, regulators such as the SEC and internal stakeholders.  

Technical accountants often deal with areas of the financial statements such as: 

• Revenue recognition 
• Stock-based compensation
• Leases 
• Business combinations 
• Financial instruments.   

They play a crucial role in preparing companies for audits, advising stakeholders during the process, implementing new accounting standards, and providing advice on accounting policies and procedures. Proactive companies will often want to understand the accounting impact of transactions prior to their execution, technical accountants will often provide strategic consulting in this regard by helping clients achieve their desired accounting outcome. 

This roadmap will guide companies through the audit preparation process from the perspective of a technical accountant, focusing on the key technical accounting steps to take, along with common challenges and solutions to ensure a successful audit. 

Understand the audit process and Its challenges 

Before diving into technical accounting details, it’s important to understand how an external audit typically unfolds. External auditors evaluate whether your financial statements comply with the relevant accounting standards, ensuring that stakeholders such as investors and regulators can rely on your financial reporting. The audit process begins with planning, during which auditors gain an understanding of your company’s business and identify major audit areas based on risk and materiality.  

Following this, auditors perform substantive and analytical procedures to detect any errors or misstatements in the financial statements. If significant or complex issues are identified during testing that were not initially scoped in planning—such as large errors or intricate accounting matters—the audit approach and materiality thresholds may be revisited. This often results in additional procedures, which can extend the audit timeline and increase audit fees. 

It’s important to note that, due to independence requirements, auditors cannot resolve accounting issues on behalf of the company. For companies lacking strong technical accounting resources, this can lead to:  

• Substantial back-and-forth communication 
• Strained resources 
• Delayed resolution of audit findings 

As a result, the audit may be significantly delayed, audit fees may increase, or the process may even be put on hold until the company addresses the identified accounting issues. 

These challenges highlight the importance of being fully prepared for the audit process. Conducting a thorough GAAP assessment before your audit begins is a critical step to identify and address potential technical accounting issues in advance, reducing the risk of delays and unexpected costs. 

GAAP assessment and technical accounting implementation 

A GAAP assessment helps identify gaps and areas needing attention before the audit begins. For a first-time audit, we recommend performing this assessment at least 6 months before your target audit start date to allow sufficient time to address any gaps identified. For recurring audits, ideally transactions are identified and assessed prior to or as they occur. 

Below are key areas where companies often encounter technical accounting issues that need to be addressed to become compliant with GAAP during a typical first audit. It’s important to note that different industries face unique challenges in this process. 

Revenue recognition  

Revenue recognition is a critical aspect of financial reporting. The Accounting Standards Codification (ASC) – Topic 606 – Revenue Recognition (“ASC 606”) provides a comprehensive framework for recognizing revenue from contracts with customers. The framework is designed to be industry agnostic as it creates one standard that is applicable for all companies. Understanding, implementing and maintaining ASC 606 is crucial for companies to demonstrate comparability with peers and reliability in financial statements. 

A company’s revenue generating activities should be assessed under the five-step model as outlined under Accounting Standards Codification (“ASC” or “Codification”) – Topic 606 – Revenue Recognition (“ASC 606”). Companies often assume their revenue recognition is straight forward without understanding the complexities of its contracts and the revenue standard. During a GAAP assessment, technical accountants are likely to find that a company has not documented its policy for revenue recognition or if documented falls short of what would be required for a policy that would withstand an audit.  

Industries such as software and biotech frequently have complex contracts with multiple units of account known under the standard as performance obligations. These performance obligations once properly identified may require complex allocation models based on a company’s determination of its standalone selling prices which may require: 

• Extensive data collection 
• An analysis of historical sales data 
• Competitor analysis.  

Furthermore, a company has to determine whether it is appropriate to recognize each performance obligation at a point in time or over-time and if over-time an appropriate measure of progress for which to reflect the pattern of transfer. 

Often, companies that have never been audited and might be using a combination of tools and excel to gather data and track revenue. Often data sources such as salesforce are flawed due to inconsistent user data inputs which does not lend itself to quick remediation of accounting issues. Due to this and complexities with the standard, documenting and applying the five-step model to contracts in order to implement changes required in order to conform with GAAP may require significant time and revenue recognition expertise. 

While revenue recognition issues may be tackled for inception to date activity in preparation for a first-time audit, contractual terms evolve, unique arrangements are entered into and new products are offered, all of which make compliance with ASC 606 an ongoing exercise of importance.  

In maturing organizations, technical accountants are included in the decision-making process to ensure contractual terms drafted will meet desired outcomes and not overcomplicate revenue recognition or overburden the accounting function. Executives often think about top line revenue and product margins but forget to contemplate increased G&A costs related to accounting for its agreements. 

Equity-based compensation 

Equity-based compensation is a common tool for attracting and retaining talent in early-stage companies. However, accounting for these awards under ASC 718 – Compensation—Stock Compensation can be another technically demanding area of a first audit. The complexity arises from the volume of awards, the variety of terms, and the need for precise valuation and expense recognition.  

As technical accountants, often we find that companies that have never undergone an audit have not recorded anything for share-based compensation in their accounting records due to a knowledge gap and the complexities involved. Furthermore, a technical accountants review of a company’s board minutes for equity grants and award modifications against the capitalization table typically results in uncovering errors in an area where stakeholders emphasize importance of having accurate data to avoid legal disputes and tax issues that may arise if not resolved. 

A foundational concept in ASC 718 is the determination of the grant date, which anchors the fair value measurement of the award. For private companies, this typically requires a third-party 409A valuation to establish the fair value of common stock. Without a contemporaneous and supportable valuation on the date of grant, auditors may challenge the appropriateness of the expense recorded, potentially leading to understated expenses. 

Technical accountants play a critical role in evaluating whether grant date criteria are met, ensuring that award terms are clearly documented and that valuation inputs are reasonable and supportable including an appropriate method of interpolation of fair value in between grant dates. This includes assessing whether awards are equity or liability classified, which affects both measurement and presentation. 

When awards include performance or market conditions, the accounting becomes even more nuanced. Companies must estimate the probability of achieving performance milestones and adjust expense recognition accordingly. This requires a robust framework for tracking progress and reassessing assumptions as facts evolve. 

Modifications—such as repricings, accelerations, or post-termination exercise period extensions —introduce additional layers of complexity. Each change must be analyzed to determine whether it results in incremental fair value and how that value should be recognized over time. 

Given the intricacies of ASC 718, in addition to share-based compensation schedules, companies often benefit from: 

• Developing a policy that outlines key assumptions 
• Valuation methodologies 
• Accounting conclusions 

This documentation not only supports audit readiness but also helps internal stakeholders understand the financial impact of equity awards.  

Research and development and internally developed software 

Accounting for R&D and software development costs depends on the project’s purpose and stage. Under ASC 730 – Research and Development, most R&D costs—like salaries, materials, and even indirect costs such as depreciation and overhead—are expensed as incurred if they support R&D activities. 

For companies that develop software, different accounting guidance applies which is dependent on whether the software will be for internal use (such as a hosted Software-as-a-Service application) or if it will be licensed and sold. 

For internally developed software, ASC 350-40 – Internal-Use Software applies. Certain costs are capitalized during the software development process whereas planning and maintenance costs are expenses as incurred.  

If the software is intended for sale or licensing, ASC 985-20 – Costs of Software to Be Sold, Leased or Marketed governs. Here, capitalization begins only after technological feasibility is established—typically when a detailed design or working prototype is in place. 

Technical accountants help determine which standard applies, identify eligible costs, assist in obtaining relevant engineering data and document the process to ensure companies are audit-ready in this area. 

Debt and equity financing 

Entities are financed through combinations of equity, debt and other instruments that have both debt and equity-like characteristics. The accounting for all of this inception to date activity can be quite complex and impact the current year’s opening balance sheet subject to audit even if instruments were converted and settled historically. 

The key complexities involved include determining proper classification of instruments as debt or equity, analyzing whether instruments contain features that require separate accounting as derivatives, resolving accounting allocations when multiple instruments are issued in conjunction with one another. Furthermore, convertible debt instruments which are commonly used as bridge financing in between funding rounds pose unique fair value and ultimate conversion method challenges. 

As technical accountants, no instrument is alike requiring an in-depth understanding of various sections of the Codification including ASC 470 – Debt, ASC 480 – Distinguishing Liabilities from Equity and ASC 815 – Derivatives and Hedging and how the guidance applies to the various nuances of the legal agreements. 

Consolidation 

For companies with multiple legal entities, consolidation introduces significant reporting complexities. One key challenge is identifying variable interest entities (VIEs)—which may not be obvious from a legal entity organization chart. Unlike traditional subsidiaries, VIEs may require consolidation even without majority equity ownership, based on control through contractual or economic interests. In contrast, entities governed by the voting interest model are typically more straightforward to assess. Consolidation assessments require detailed evaluations of voting rights, exposure to financial returns, and decision-making authority to determine whether an entity should be consolidated under either model. 

When operations span multiple countries, determining the functional currency of each subsidiary becomes critical. This decision—often involving significant judgment—affects how foreign exchange gains and losses are reported. Notably, the functional currency may differ from the local currency where the entity operates. 

As technical accountants, we guide companies through the intricacies of ASC 810 – Consolidation and ASC 830 – Foreign Currency Matters. Early involvement is essential—especially during entity formation—as an incorrect functional currency determination can be costly and difficult to correct within an ERP system. 

Leases 

ASC 842 – Leases, in effect for years, still presents accounting challenges for companies that have never been audited and implemented the standard and for companies under ASC 842 that encounter new unique lease transactions such as sub-leases or significant lease build-outs. ASC 842 defines leases as any contract that grants control over identified assets for a period in exchange for payment.  

One common areas for first year audit findings are what are referred to as embedded leases, or a contract that meets the GAAP definition of a lease but might be structured as a service contract or a component within a larger contract such as outsourced contract manufacturing with dedicated machinery.   

Entities also need to evaluate and conclude on complex lease terms for each reporting period such as: 

• Assessing classification as operating or finance 
• Estimating a discount rate 
• Determining the lease term, including non-cancellable periods, renewal options, and their likelihood.  

Subsequent contract amendments that change the term, payment structure or assets under lease can result in modification accounting for leases under 842.  

These areas of judgement can have major implications for companies, leading to large potential financial reporting misstatements if improperly evaluated.  

Business Combinations 

When a company completes a merger or acquisition, it triggers a range of complex accounting requirements under ASC 805 – Business Combinations. One of the first steps is determining whether the transaction qualifies as a business combination or an asset acquisition, as this distinction drives the accounting treatment. 

Key considerations include identifying the acquirer and acquiree, and accurately measuring GAAP purchase consideration, including any contingent payments. It’s also critical to distinguish between acquisition consideration and other concurrent arrangements—such as equity awards or compensation agreements—to avoid overstating goodwill or understating expenses. 

A central focus of purchase accounting is the identification and valuation of acquired intangible assets, such as customer relationships, developed technology, and trademarks. These assets must be separately recognized from goodwill and require supportable valuation methodologies. 

Another common challenge is ensuring the accuracy and completeness of the acquired company’s opening balance sheet. This includes validating the recognition of all assets and liabilities—such as contingent liabilities (e.g., unresolved legal claims)—and addressing cutoff issues that may affect the timing of recognition. 

Successful execution of purchase accounting requires close coordination across finance, valuation, and systems teams. Early involvement of technical accountants helps ensure that due diligence findings are properly reflected in the accounting and that key judgments are well-documented. 

The path forward with BPM 

An audit represents more than just a compliance exercise — it’s an opportunity to strengthen your financial reporting foundation and position your organization for future growth. By partnering with BPM’s technical accounting professionals, you gain access to proven methodologies and practical guidance that help ensure audit success. 

To learn how we can help guide your organization through the audit readiness process and establish lasting financial reporting excellence, contact us today. 

The One Big Beautiful Bill Act (OBBBA), as it’s been coined, has delivered what many in the real estate industry have been waiting for: significant tax advantages that can transform investment strategy.  

As the phasing out of bonus depreciation has impacted deal economics over the past few years, real estate developers, REITs, and property investors now have substantial new opportunities to explore. 

The OBBBA brings back full bonus depreciation and introduces several other provisions that create meaningful opportunities for strategic real estate investments. The legislation:  

• restores 100% bonus depreciation for qualified property
• reverts 163(j) interest limitation to an EBITDA-based limit, allowing for larger interest deductions
• introduces special manufacturing real estate incentives through qualified production property provisions
• expands the Low-Income Housing Tax Credit program with increased allocations and reduced financing thresholds
• raises Section 179 expensing limits to $2.5 million
• gives REITs operational flexibility with the restoration of the Taxable REIT Subsidiary threshold to 25%

These changes represent the most significant positive shift in real estate tax policy in recent years, creating a favorable environment for strategic positioning and investment timing. Here’s how these provisions can impact real estate portfolios and investment strategies. 

100% bonus depreciation returns for qualified property 

The restoration of 100% bonus depreciation for qualified property acquired after January 19, 2025, represents a game-changing opportunity for real estate investors. This provision allows immediate deduction of the full cost of qualifying improvements and equipment, rather than spreading depreciation over multiple years. 

What qualifies for bonus depreciation 

Under the OBBBA, investors can take advantage of full bonus depreciation for: 

• Qualified improvement property (interior improvements to nonresidential buildings) 
• Most personal property with a recovery period of 20 years or less 
• Certain improvements to leased property 
• Computer software 

Impact on investment strategy 

The return of 100% bonus depreciation fundamentally changes how potential acquisitions should be evaluated. Consider a scenario where an investor is purchasing a $10 million office building that requires $2 million in interior improvements. Under the restored bonus depreciation rules, the full $2 million in improvements can be immediately deducted, creating significant tax savings that improve the project’s net present value. 

This immediate expensing opportunity also affects timing decisions. Properties acquired and placed in service after January 19, 2025, will benefit from these enhanced depreciation rules, making strategic timing crucial for maximizing tax benefits. 

Manufacturing real estate gets special treatment 

The OBBBA introduces qualified production property (QPP) provisions that create unique advantages for manufacturing-related real estate investments. This new category allows 100% depreciation for manufacturing facilities and related infrastructure. 

Understanding qualified production property 

QPP encompasses real estate specifically designed and used for manufacturing, including: 

• Manufacturing facilities and production buildings 
• Warehouses and distribution centers directly connected to manufacturing operations 
• Research and development facilities supporting manufacturing activities 

Strategic implications for developers 

For those developing or acquiring manufacturing real estate, the QPP provisions offer compelling advantages. A $15 million manufacturing facility can now be fully depreciated in the first year, creating substantial tax savings that significantly improve project returns. 

This provision also opens new opportunities for partnerships with manufacturers looking to expand their operations. The ability to offer enhanced tax benefits through QPP designation can make projects more attractive to potential tenants and buyers. 

Low-Income Housing Tax Credit program expansion 

The OBBBA brings welcome enhancements to the Low-Income Housing Tax Credit (LIHTC) program, creating new opportunities for affordable housing developers and investors. 

Key LIHTC improvements 

The legislation includes several provisions that strengthen the LIHTC program: 

• Increased state allocation amounts to support more affordable housing development 
• Reduced tax-exempt bond financing thresholds to allow easier access to the credit 

 These enhancements make previously challenging rural developments more financially viable, opening new markets for affordable housing development. 

Opportunity Zone benefits expand with new provisions 

The OBBBA enhances the Opportunity Zone program with additional incentives designed to attract more investment to economically distressed communities. 

New Opportunity Zone advantages 

The legislation introduces several enhancements to the existing program: 

• The Qualified Opportunity Zone program is now permanently extended and enhanced.  
•  The program now allows for new designations to be made every 10 years beginning 1/1/2027.
• Additionally, it establishes “Qualified Rural Opportunity Funds” to provide additional tax incentives. 

Strategic considerations for Opportunity Zone investments 

These enhancements make Opportunity Zone investments more attractive by providing greater flexibility and additional tax benefits. The extended timelines reduce the pressure on investors to deploy capital quickly, allowing for more thoughtful project selection and development. 

The expanded business activities definition also opens new possibilities for mixed-use developments and projects that combine residential, commercial, and community-serving components. This flexibility can lead to more comprehensive neighborhood revitalization efforts while maximizing tax benefits. 

Enhanced Section 179 expensing limits 

The OBBBA increases Section 179 expensing limits to $2.5 million, providing additional flexibility for real estate-related equipment and improvements. 

Practical applications 

This increased limit allows immediate expensing of more property in a single tax year, including: 

• HVAC systems and equipment 
• Security systems and technology infrastructure 
• Furniture and fixtures for rental properties 
• Landscaping and site improvements 

The higher Section 179 limits work particularly well in conjunction with bonus depreciation, providing multiple strategies for accelerating deductions. 

Strategic timing considerations 

The OBBBA’s provisions create several timing opportunities that require careful planning: 

Immediate actions to consider 

• Evaluate pending acquisitions scheduled for early 2025 to determine if timing adjustments could maximize tax benefits 
• Review current development pipelines to identify projects that could benefit from QPP designation 
• Assess existing properties for improvement opportunities that could qualify for enhanced depreciation 

Interest deduction limitations ease under Section 163(j) 

The OBBBA provides relief from the restrictive interest deduction limitations imposed under Section 163(j), which have significantly impacted leveraged real estate investments since 2018. 

The legislation modifies Section 163(j) in several important ways: 

• Increases the adjusted taxable income threshold for interest deduction limitations 
• Reduces the impact of the limitation on acquisition and development financing 

Impact on leveraged real estate investments 

For highly leveraged real estate projects, these changes can substantially improve cash flow projections. Consider a development project with $50 million in acquisition and construction financing: under the previous rules, interest deductions were severely limited based on adjusted taxable income calculations. The OBBBA’s modifications allow for greater deductibility of interest expenses, improving the project’s overall economics. 

This relief is particularly valuable for value-add strategies and major repositioning projects that rely heavily on debt financing during renovation periods when properties generate limited income. 

REIT flexibility increases with TRS threshold restoration 

The OBBBA restores the Taxable REIT Subsidiary (TRS) asset threshold from 20% to 25% for taxable years beginning after December 31, 2025. This change provides REITs with greater operational flexibility and opportunities for diversification. 

Strategic opportunities for REITs 

The restored 25% threshold allows REITs to: 

• Expand property management and development activities through TRS entities 
• Pursue additional revenue-generating services 
• Increase flexibility in joint venture structures 
• Enhance portfolio diversification strategies 

This change removes a constraint that has limited REIT growth strategies in recent years, opening new possibilities for revenue enhancement and operational expansion. 

Energy efficiency credits phase out: Act before year-end 

While the OBBBA provides numerous benefits for real estate investments, it notably does not extend energy efficiency tax credits that are set to expire at the end of 2025. 

Credits not renewed in the OBBBA 

Several energy-related tax incentives will expire without renewal: 

• Commercial building energy efficiency deduction under Section 179D 
• Residential energy efficiency tax credits 
• Increased limitations on the ability to utilize Clean Electricity Investment Credits 

Immediate action required 

Properties currently in development or planning phases should prioritize energy efficiency improvements to capture these credits before they expire. The Section 179D deduction, which allows up to $5.00 per square foot for qualifying energy-efficient improvements, represents significant value that will be lost after December 31, 2025. 

Strategic timing for energy projects 

Consider accelerating the following activities to capture expiring credits: 

• HVAC system upgrades and high-efficiency installations 
• LED lighting conversions and smart building systems 
• Building envelope improvements including insulation and windows 
• Energy management system implementations 

The combination of these expiring credits with the restored bonus depreciation rules creates a unique opportunity for projects completed before year-end. Properties that can qualify for both energy efficiency credits and 100% bonus depreciation will achieve maximum tax benefits. 

Putting it all together 

The OBBBA represents the most significant positive change in real estate tax policy in recent years. The combination of restored bonus depreciation, manufacturing incentives, LIHTC enhancements, and increased REIT flexibility creates a favorable environment for strategic real estate investment. 

Success in capitalizing on these opportunities will depend on understanding how these provisions interact with specific investment strategies and acting quickly to position portfolios for maximum benefit. 

Ready to maximize your real estate tax strategy? 

The OBBBA’s provisions offer substantial opportunities, but navigating the complex interaction of these new rules requires careful planning and strategic implementation. BPM’s real estate tax professionals can help identify which opportunities align with investment goals and develop strategies to maximize tax benefits while maintaining compliance with all applicable regulations. 

Contact BPM today to discuss how these changes can benefit your real estate portfolio and investment strategy. Let’s work together to turn these new tax advantages into meaningful results for your business. 

You might need a forensic accountant sooner than you think. Many business owners wait until they discover fraud or face a crisis before seeking help, but forensic accounting offers value well before problems surface. These specialized professionals don’t just investigate existing fraud—they help prevent it from happening in the first place. 

Today’s digital workplace creates new vulnerabilities that traditional accounting methods cannot address. Online payment fraud grows alongside e-commerce expansion, while employee fraud continues to devastate small businesses. When trusted team members face financial stress, they often rationalize theft against their employers, sometimes making asset recovery impossible.  

This article will explore the key situations when you should consider bringing in a forensic accountant and how they can protect your business. 

The digital fraud landscape demands proactive protection 

E-commerce growth brings sophisticated fraud schemes that target businesses of all sizes. Cybercriminals exploit stored credit card information, while employees use digital tools to hide their tracks more effectively than ever before. Your business faces risks that didn’t exist a decade ago, making traditional financial oversight insufficient.  

Internal threats often prove more damaging than external ones. Employees with financial access can manipulate systems, create false vendors, add ghost employees to payroll, or redirect payments to personal accounts. These schemes can operate undetected for months or years, potentially causing devastating losses. 

Key situations that require forensic accounting services 

Forensic accounting services become essential when financial irregularities surface or when complex transactions require expert analysis. The following scenarios represent the most common situations where businesses and individuals benefit from professional forensic investigation. 

Business disputes and partnership conflicts often trigger the need for forensic investigation. When partners disagree about financial matters or suspect misconduct, forensic accountants can uncover the truth and provide objective analysis for resolution or litigation. 

Mergers and acquisitions require thorough financial due diligence that goes beyond standard audits. Forensic accountants identify hidden liabilities, verify asset values, and uncover potential fraud that could derail deals or affect valuations. 

Insurance claims investigations benefit from forensic accounting when companies need to substantiate losses or when insurers suspect inflated claims. These professionals can trace financial impacts and provide documentation that supports fair settlements. 

Divorce proceedings involving business owners or high-net-worth individuals require forensic accountants to identify and value all assets accurately. They can uncover hidden income, trace asset transfers, and ensure equitable distribution of marital property. 

Employee terminations sometimes reveal suspicious financial activity that warrants investigation. When you discover unexplained financial discrepancies after an employee leaves, forensic accountants can determine the scope of potential fraud and help with recovery efforts.  

How forensic accounting differs from traditional audits 

Standard financial audits focus on providing reasonable assurance that financial statements present a fair picture to stakeholders. Auditors look for material errors that could mislead users of financial statements, but they’re not designed to catch fraud that doesn’t significantly impact overall financial presentation. 

Forensic accountants take a different approach. They dig deeper into financial records, combining accounting knowledge with investigative techniques to uncover irregularities regardless of size. They assume fraud might exist and work systematically to find evidence. 

While auditors follow standardized procedures and sampling methods, forensic accountants adapt their approach based on specific circumstances and red flags they discover. They’re trained to think like fraudsters and understand how schemes typically operate.  

The prevention advantage 

Smart business owners use forensic accounting proactively rather than reactively. Regular forensic reviews can identify control weaknesses before fraudsters exploit them. This preventive approach costs less than dealing with fraud after it occurs and protects your reputation from damage. 

Forensic accountants can assess your current internal controls, recommend improvements, and help implement monitoring systems that deter fraud. They can also provide employee training to help your team recognize warning signs and report suspicious activity. 

Third-party relationships also benefit from forensic oversight. When you work with payroll companies, benefit administrators or other financial service providers, periodic forensic reviews ensure they’re handling your money properly and maintaining adequate controls. 

Signs you need forensic accounting services now 

Watch for red flags that indicate immediate need for forensic investigation: unexplained financial discrepancies, missing documentation, employee lifestyle changes that don’t match their income, vendor complaints about unpaid bills when you think you’ve paid them or unusual patterns in financial data. 

Customer complaints about unauthorized charges, discrepancies between cash receipts and bank deposits or employees who refuse to take vacations or share responsibilities also warrant investigation. 

Working with BPM  

BPM understands that every business faces unique financial risks and challenges. Our forensic accounting team combines deep accounting knowledge with investigative skills to protect your interests, whether you need fraud prevention, investigation services, or litigation support. We work closely with your management team to understand your business operations and tailor our approach to your specific needs. 

To discuss how our forensic accounting services can protect your business, preserve your reputation and provide the financial insights you need to make informed decisions, contact us. 

The recently enacted “One Big Beautiful Bill Act” (OBBBA) has introduced sweeping changes to the U.S. international tax landscape, and if your company operates globally, these modifications will likely impact your bottom line.  

Significant changes to the international tax landscape

While the specifics of this legislation can feel overwhelming, understanding the key provisions and their implications is crucial for effective tax planning moving forward. Let’s walk through some of the most significant changes and what they mean for your business. 

GILTI and FDII face reduced benefits 

Two of the most impactful changes under the OBBBA involve the Global Intangible Low-Taxed Income (GILTI) and Foreign-Derived Intangible Income (FDII) provisions, both of which will result in higher effective tax rates for many multinational companies. 

GILTI tax rate increases to 14% 

The OBBBA reduces the Section 250 deduction for GILTI from 50% to 40%, effectively raising the tax rate from approximately 10.5% to 12.6%. This represents a significant increase that will directly impact your company’s tax liability on foreign earnings. 

Additionally, the legislation increases the deemed paid tax credit for GILTI income from 80% to 90%, which provides some relief but doesn’t fully offset the higher base rate. 

FDII incentives diminish 

Similarly, the FDII tax incentive has been scaled back from 37.5% to 33.34%, resulting in an effective tax rate of approximately 14% for export-related income. This change reduces the competitive advantage that U.S. companies previously enjoyed when operating in international markets. 

Manufacturing companies face the biggest shock 

Perhaps the most unexpected and impactful change is the complete elimination of the Qualified Business Asset Investment (QBAI) provision under GILTI. This development will particularly affect traditional manufacturing companies with significant foreign operations. 

Previously, QBAI allowed companies with substantial tangible assets overseas to reduce their GILTI inclusion, effectively keeping more foreign earnings offshore without additional U.S. tax. With this provision eliminated, U.S. multinationals with foreign manufacturing operations will face higher tax burdens on their international income. 

This change was largely unanticipated and will require immediate attention from companies that have structured their international operations around the QBAI benefit. 

Additional provisions create compound effects 

The OBBA includes several other modifications that, while individually smaller, contribute to the overall tax increase: 

• BEAT rate adjustment: The Base Erosion and Anti-Abuse Tax (BEAT) rate increases marginally from 10% to 10.5% 
• Imposes a book-income minimum tax of 15% of adjusted financial-statement income (AFSI) for “applicable corporations” with over $1 billion of average AFSI. 
• Section 163J modification: Business interest limitation calculations will now occur before applying interest capitalization provisions and Subpart F inclusions, net CFC Tested Income and Section 78 gross-ups are added back to EBIT in computing adjusted taxable income.  
• CFC look-through rule: This provision has been made permanent, providing some planning certainty 

Tariff uncertainty adds complexity 

Beyond the specific tax provisions, ongoing tariff discussions create additional uncertainty for international businesses. The fluid nature of trade policy means companies must remain flexible and prepared to adapt their strategies as conditions change. 

What you should do now 

With the OBBA now enacted, the time for speculation has passed. Here’s how you can begin preparing for these changes: 

Start planning immediately 

• Review your current international tax structure and identify areas most affected by the changes 
• Model the financial impact of the new GILTI and FDII rates on your projected earnings 
• Assess whether your foreign manufacturing operations need restructuring or transfer pricing adjustments in light of the QBAI elimination 

Evaluate your options 

Depending on your specific situation, various strategies may help mitigate the tax effects: 

• Consider timing of income recognition and expense deductions 
• Explore opportunities to optimize your international structure before the provisions take full effect 
• Review transfer pricing policies to align with the new landscape 

The bottom line 

The OBBA represents a clear shift toward higher taxation of international income for U.S. multinationals. While these changes create challenges, proactive planning can help minimize their impact on your business. The key is to act now, while you still have time to implement strategic adjustments. 

The elimination of QBAI, combined with higher GILTI and reduced FDII benefits, means that many companies will face increased tax costs over the coming years. However, with careful planning and the right advisory support, you can navigate these changes and position your business for continued success in the global marketplace. 

Ready to develop your international tax strategy? The experienced professionals at BPM can help you understand how the OBBA affects your specific situation and develop actionable strategies to manage these changes. Contact us today to discuss your international tax planning needs and explore opportunities to optimize your global operations under the new rules. 

The U.S. financial system is on the verge of a major transformation. While crypto has long been associated with retail investors and speculative trading, recent moves by large financial institutions to launch ETFs and build blockchain infrastructure signal a pivotal shift toward digital assets reshaping mainstream business operations. 

Congress has declared July 14–18 as “Crypto Week,” with a legislative agenda that could lay the foundation for widespread digital asset adoption in the business world. For business leaders, this is more than just a policy milestone—it’s a strategic moment to assess how digital finance could enhance operations, payment flows, and competitive positioning. 

What’s happening in Washington this week: Business-critical legislation in play 

During Crypto Week, Congress is focusing on three pivotal pieces of legislation that could reshape American finance: 

• The GENIUS Act: Establishes federal regulations for stablecoins (digital assets pegged to the U.S. dollar) 
• The Digital Asset Market Structure Clarity Act: Creates a regulatory framework for cryptocurrency trading and institutional engagement 
• The Anti-CBDC Surveillance State Act: Restricts the Federal Reserve from developing a central bank digital currency (CBDC) 

While each of these bills targets different facets of digital finance, together they signal a shift toward greater regulatory clarity—paving the way for broader business adoption of crypto and blockchain solutions. 

Stablecoins could modernize B2B and cross-border transactions 

The rise of faster, cheaper, and more global payments 

If the stablecoin legislation passes, businesses could benefit from: 

• Real-time settlements – Eliminate delays associated with wire transfers and check clearing 
• Lower transaction costs – Reduce reliance on intermediaries and avoid processing fees 
• Improved international payments – Pay overseas vendors and contractors in seconds, not days 

Use cases include international payroll, supplier payments, and automated settlement processes. For businesses operating across borders—or scaling into new markets—stablecoins may soon become a strategic advantage rather than a novelty. 

A new era of institutional access to digital assets 

Pending legislation clarifying digital asset market structure could unlock significant opportunities for companies to engage with crypto in regulated, scalable ways. With a clear framework in place, businesses may soon be able to: 

• Access crypto products through traditional brokerage platforms under SEC/CFTC oversight 
• Offer digital asset exposure in employer-sponsored retirement plans, like 401(k)s 
• Integrate tokenized assets into broader investment and treasury strategies 

These developments would provide the legal certainty and infrastructure needed for corporations, investment funds, and family offices to confidently incorporate digital assets into portfolio planning, capital allocation, and tax-efficient structuring—bringing crypto from the periphery to a core component of institutional finance.  

Tax and compliance complexity is coming—be ready 

As digital payments and investments move into the mainstream, tax and reporting obligations will increase in parallel. Businesses should prepare for: 

• Expanded information reporting for digital asset transactions 
• Taxable events tied to stablecoin spending, transfers, or staking rewards 
• Transfer pricing and cross-border tax considerations on crypto-related intercompany payments 

Proactive compliance planning will be key, especially for businesses operating in multiple jurisdictions. 

What business leaders should do now 

Prepare your business for digital finance integration 

Here are key steps to consider: 

• Assess systems readiness – Can your accounting and ERP platforms support digital asset flows? 
• Evaluate cost savings – Identify areas where stablecoins or blockchain can streamline payments and reduce friction. 
• Train internal teams – Finance, treasury, tax, and compliance departments must understand the implications of crypto transactions. 
• Review tax posture – Consider how crypto receipts, payments, and holdings may impact your domestic and international tax exposure. 

Looking ahead: What Crypto Week could mean for business 

The outcomes of Crypto Week will likely influence: 

• The speed and scope of business adoption of digital payments 
• The availability of institutional crypto investment vehicles 
• The design of compliance frameworks around crypto taxation 
• The evolution of B2B fintech competition, particularly between banks and blockchain-native solutions 

Ready to future-proof your business? 

BPM’s blockchain and digital asset team helps businesses navigate the intersection of tax, regulation, and innovation. Whether you’re exploring crypto payroll, blockchain settlement systems, or token-based investment models, we’re here to guide you through the complexity. 

Contact BPM today to discuss how these developments might impact your company’s financial strategy and learn about the steps you can take to prepare for the digital finance future. 

In today’s interconnected business environment, organizations often rely on third-party service providers to handle critical operations ranging from payroll processing to cloud-based data storage. This growing dependence on external vendors creates new challenges for companies trying to maintain oversight of their internal controls and ensure compliance with regulatory requirements.  

What is a SOC report? 

System and Organization Controls (SOC) reports are a vital tool for addressing these challenges, providing standardized assessments of service organizations’ internal controls and security measures. 

SOC examinations serve multiple stakeholders by offering independent verification that service providers maintain adequate controls over the processes and the data they handle. Financial statement auditors use these reports to streamline their audit procedures, while sophisticated users of service organizations demand them as proof that their sensitive information remains secure and protected.  

This article will explore the three types of SOC reports, explain when each type is needed and discuss how organizations can determine which SOC report best serves their specific requirements. 

Understanding the three main types of SOC reports 

The SOC framework, created by the AICPA, encompasses three distinct report types, each designed to meet different stakeholder needs and use cases. SOC 1®, SOC 2® and SOC 3® reports all provide valuable insights into service organization controls, but they differ significantly in their scope, intended audience, and level of detail. The SOC 1 and SOC 2 reports usually have up to 5 sections, the assertion, the opinion, Section III the description, Section IV the controls, and sometimes section 5 which is known as “Other Information” and is outside the service auditors opinion.

SOC 1 reports focus on financial reporting controls 

SOC 1 reports examine controls that directly impact a user entity’s internal control over financial reporting. These reports specifically target the needs of user entities and the certified public accountants who audit their financial statements. When a company outsources processes that affect financial reporting—such as payroll processing, loan servicing or transaction processing—a SOC 1 report helps to provide assurance that the service organization maintains effective controls over these critical functions. 

Organizations typically need SOC 1 reports when they rely on external service providers for processes that directly impact their financial statements. For example, a company using a third-party payroll provider would benefit from reviewing that provider’s SOC 1 report to understand how payroll controls support the company’s overall financial reporting objectives. 

A SOC 1 report should have controls and control objectives around processing the transactions completely and accurately. The description should include details and possibly a flow diagram showing how those transactions function.  

SOC 2 reports address the Trust Services Criteria (TSC) 

SOC 2 reports evaluate service organization controls based on the five trust services criteria: security, availability, processing integrity, confidentiality and privacy.  

Service organization management selects which criteria to include in the examination based on their understanding of the user entities’ needs and what they want to communicate to stakeholders. 

These reports play important roles in:  

• Vendor management programs 
• Internal corporate governance processes 
• Risk management activities 
• Regulatory oversight initiatives 

SOC 2 reports prove particularly valuable when organizations use outsourced or digital services, such as cloud-based software, data centers, or software-as-a-service platforms. 

The demand for SOC 2 reports has grown significantly as organizations face increasing cybersecurity threats and regulatory requirements. Technology companies, healthcare organizations and financial services firms frequently require SOC 2 reports from their service providers to demonstrate compliance with industry standards and regulatory frameworks. 

SOC 3 reports offer general-use accessibility 

SOC 3 reports cover the same trust services criteria as SOC 2 reports but provide less detailed information about the auditor’s testing procedures and system descriptions. The key advantage of a SOC 3 report lies in their unrestricted distribution—organizations can share these reports publicly and often post them on their websites. 

Service organizations often pursue SOC 3 reports as marketing tools to demonstrate their commitment to security and control effectiveness to potential customers. While SOC 3 reports provide less detail than their SOC 2 counterparts, they offer sufficient information for general users to assess a service organization’s control environment.  

To obtain a SOC 3 report a service organization would need to complete a SOC 2 type 2 examination with an unmodified opinion. 

There are two other SOC report types in the AICPA suite of SOC services. 

• SOC for Supply Chain, a reporting framework that can be used by CPAs, management accountants, and organization management to communicate about the organization’s supply chain risk management efforts and assess the effectiveness of system controls that mitigate those risks 

• SOC for Cybersecurity,  a report on a description of an entity’s cybersecurity risk management program and effectiveness of controls within the program at the entity level 

Type 1 vs Type 2 examinations 

Both SOC 1 and SOC 2 reports come in two varieties: Type 1 and Type 2 examinations. Understanding the distinction between these examination types helps organizations choose the most appropriate option for their needs. 

Type 1 

Type 1 reports focus on the design of controls at a specific point in time. They describe the service organization’s system and evaluate whether the controls are suitably designed and implemented to achieve their stated objectives. However, Type 1 reports do not test whether these controls operate effectively over time. 

Type 2 

Type 2 reports include everything found in Type 1 reports plus additional testing of control operating effectiveness over a specified period, typically ranging from six months to one year. These reports provide detailed descriptions of the auditor’s testing procedures and results, offering users greater confidence in the service organization’s control environment. 

Most user organizations prefer Type 2 reports because they provide evidence of sustained control effectiveness rather than just a snapshot of control design. Type 2 reports require more time and resources to complete but offer significantly more value to stakeholders making risk assessments about service providers. 

Partner with BPM for your SOC reporting needs 

Navigating the complexities of SOC reporting requires working with professionals who understand both the technical requirements and business implications of these examinations. BPM brings deep knowledge of SOC examinations and extensive experience helping organizations across diverse industries achieve their assurance objectives. 

Our team works closely with service organizations to determine the most appropriate SOC report type, develop comprehensive testing strategies and deliver reports that provide meaningful value to stakeholders. We understand that SOC reports serve strategic business purposes beyond mere compliance, helping organizations build trust with customers, streamline vendor management processes and demonstrate their commitment to security and control effectiveness.  

To discuss how we can support your SOC reporting requirements and help you achieve your business objectives through effective internal control assurance, contact us.    

Your technology company has reached an exciting milestone. You’ve built a product that customers love, secured meaningful revenue and now you’re ready for the next phase of growth. Whether you’re pursuing Series A funding, preparing for acquisition talks or considering an eventual IPO, one critical step stands between you and your goals: your first financial audit. 

Many tech founders view audits as necessary evils—bureaucratic hurdles that drain time and resources. This mindset sets you up for a stressful, inefficient process that could delay your business objectives. Instead, approach your first audit as a strategic investment in your company’s future. A well-executed audit not only satisfies investor requirements but also strengthens your financial infrastructure and builds credibility in the marketplace.  

Preparing for your first audit: Best practices for tech companies 

This article will guide you through the essential steps to prepare your growing tech company for a successful first audit experience.  

Start with your team structure 

Your audit’s success depends heavily on having the right people in place before the auditors arrive. You need team members who understand both your business operations and financial reporting requirements. 

• Designate a main point of contact who will coordinate with the audit team throughout the process. This person should have a strong financial background and comprehensive knowledge of your company’s accounting practices. They’ll serve as the primary liaison, fielding questions and ensuring information flows efficiently between your team and the auditors. 
• Identify key personnel from different departments who can speak to specific areas of your business. Your engineering team should be ready to discuss software development costs and capitalization policies. Sales leadership needs to explain your revenue recognition processes, subscription models and customer contract terms. Operations staff should understand your vendor relationships and expense categorization. 
• Don’t forget about your board members and advisors. They may need to provide information about equity transactions, board resolutions and strategic decisions that impact your financial statements. 

Establish robust financial systems early 

Growing tech companies often outgrow their initial accounting setups faster than they realize. What worked when you had ten customers and two employees won’t suffice when you’re managing hundreds of subscriptions and a distributed team. 

• Implement enterprise-grade accounting software that can handle complex revenue recognition scenarios. Technology companies deal with subscription billing, usage-based pricing, annual contracts paid upfront, and various discount structures. Your system needs to track these transactions accurately and generate reports that align with generally accepted accounting principles. 
• Set up proper month-end and quarter-end closing procedures. Many startups operate with informal financial processes, but auditors need to see consistent, documented procedures. Create checklists for closing activities, establish deadlines for different team members, and document who’s responsible for each step. 
• Build strong internal controls around financial processes. Separate duties so that no single person can initiate, approve, and record transactions. Implement approval workflows for expenses, vendor payments, and payroll. These controls protect your company from fraud and demonstrate to auditors that you take financial governance seriously. 

Organize your documentation systematically 

Auditors live and breathe documentation. The more organized and complete your records, the smoother your audit will proceed. Start gathering documents well before your audit begins. 

• Create a comprehensive file system for all contracts and agreements. This includes customer contracts, vendor agreements, employment contracts, lease agreements, and any legal settlements. For tech companies, pay special attention to your customer contracts since these drive your revenue recognition policies. 
• Maintain detailed records of all equity transactions. Document stock issuances, option grants, warrant agreements and any changes to your capitalization table. Include board resolutions authorizing these transactions and any third-party valuations you’ve obtained. 
• Keep thorough records of your intellectual property and software development activities. Track which development costs you’ve capitalized versus expensed and maintain documentation supporting these decisions. This becomes particularly important as your engineering team grows and your development processes become more sophisticated. 

Address common technology accounting complexities 

Technology companies face unique accounting challenges that can surprise first-time audit participants. Understanding these areas beforehand helps you prepare appropriate documentation and policies. Familiarize yourself with the follow challenges: 

1. Revenue recognition represents the biggest complexity for most technology companies. You need clear policies for recognizing revenue from annual contracts, handling upgrades and downgrades, and accounting for professional services revenue. Document your decision-making process for these scenarios and ensure your accounting treatment remains consistent. 

2. Stock-based compensation requires careful attention, especially if you’ve issued options at different strike prices or granted equity to consultants and advisors. You’ll need documentation supporting the fair value of your common stock at each grant date, which often requires third-party valuations. 

3. Software development costs create another area of complexity. You need policies determining which development activities qualify for capitalization and which should be expensed immediately. Document your development processes and maintain records showing how you apply these policies consistently. 

Plan your timeline strategically 

First audits always take longer than expected. Factor this reality into your planning, especially if you have hard deadlines for investor meetings or board presentations. 

• Start your audit preparation at least three months before you need final results. This gives you time to address any issues the auditors identify without rushing through important corrections. Remember that fixing problems discovered during the audit often requires additional documentation and sometimes restatement of prior periods. 
• Be sure to build buffer time into your schedule for common delays. Auditors might identify transactions that require additional research, or they might request documentation that takes time to compile. Your key personnel might be traveling or focused on other priorities when auditors need their input. 
• Communicate your timeline clearly to all stakeholders, including investors, board members and internal team members. Set expectations about when people might need to be available for auditor questions and when you expect to have final results. 

Choose the right audit firm 

Not all audit firms understand the complexities of technology businesses. Look for firms with specific experience auditing technology companies. 

It’s also important to consider the firm’s ability to grow with your company. If you’re planning to go public eventually, choose a firm that can handle public company audits. This continuity helps avoid the disruption of changing audit firms later in your growth journey.   

Working with BPM for your first audit 

At BPM, we understand the unique challenges facing growing technology companies during their first audit experience. Our technology practice has guided hundreds of companies through this critical milestone, helping them build strong financial foundations while meeting their business objectives efficiently. We know that your time is valuable and your goals are ambitious, which is why we focus on making the audit process as streamlined and educational as possible. 

Our team brings deep experience with tech-specific accounting issues, from complex revenue recognition scenarios to stock-based compensation valuations. We work closely with your team to: 

• Identify potential issues early 
• Provide clear guidance on best practices
• Help to ensure your first audit becomes a steppingstone to future success rather than a roadblock 

To discuss how we can support your growth journey with confidence and clarity, contact us.  

If you’re a real estate developer in California, you’ve likely felt the frustration of navigating the California Environmental Quality Act (CEQA) requirements. The lengthy environmental reviews, potential litigation threats, and unpredictable timelines have been significant hurdles in bringing housing and infrastructure projects to fruition. However, recent legislative changes are reshaping this landscape in ways that could dramatically impact your development strategy. 

On June 30, 2025, Governor Newsom signed Assembly Bill 130 and Senate Bill 131 into law, implementing what he called “the most consequential housing and infrastructure reform in recent state history.” These budget trailer bills, now in effect, introduce sweeping changes to CEQA that could accelerate project timelines and reduce regulatory uncertainty for qualifying developments. 

Understanding the new CEQA exemptions 

The legislation creates several new categorical exemptions that bypass traditional CEQA review requirements. These changes represent a fundamental shift from the previous regulatory approach, where environmental impact studies could extend project timelines by 18 months or more. 

Urban infill housing developments get streamlined path 

The most significant change for housing developers involves the new urban infill exemption. Unlike the existing Class 32 categorical exemption, which is limited to five acres and requires extensive environmental analysis, this statutory exemption allows qualifying projects up to 20 acres with minimal environmental review. 

To qualify for this exemption, your housing development project must meet specific criteria: 

• At least two-thirds of square footage must be dedicated to residential use 
• Minimum density requirements of 15 dwelling units per acre in metropolitan counties or 10 units per acre in suburban jurisdictions 
• Sites must be previously developed urban infill locations with specific adjacency requirements 
• Projects must comply with existing general plans and zoning ordinances 
• All SB 35 environmental siting criteria must be met 

The approval timeline is equally compelling. Once tribal consultation is complete, local agencies have just 30 days to approve or disapprove qualifying projects—a dramatic reduction from traditional CEQA timelines. 

Manufacturing and infrastructure projects see relief 

Advanced manufacturing projects on industrially zoned sites now enjoy CEQA exemptions, particularly benefiting semiconductor, microelectronics, and nanotechnology developments. High-speed rail projects, broadband infrastructure, and various public benefit projects also receive streamlined treatment under the new framework. 

Key compliance considerations for developers 

While these exemptions offer significant advantages, they come with specific requirements that demand careful attention during project planning. 

Labor and environmental requirements remain 

Don’t assume that CEQA exemptions eliminate all regulatory obligations. Projects must still meet specified labor requirements for certain developments, conduct Phase I Environmental Site Assessments, and address any recognized environmental conditions. For housing near freeways, additional air quality mitigation measures are mandatory. 

Historic preservation and tribal consultation 

The legislation maintains protections for historic structures and requires consultation with culturally affiliated California Native American tribes. While this consultation process is expedited compared to traditional CEQA review, it remains a critical compliance step that can influence project approval timelines. 

Geographic and use restrictions 

Several exemptions exclude projects on “natural and protected lands” and impose specific use restrictions. Warehouse distribution centers over 50,000 square feet and oil and gas infrastructure cannot benefit from housing-related exemptions, regardless of project size or location. 

Strategic implications for development planning 

These changes create new opportunities for strategic project positioning and site selection. The expanded urban infill exemption allows for larger projects while reducing the technical studies traditionally required under Class 32 exemptions. This shift could make previously marginal sites economically viable and accelerate development timelines significantly. 

Site selection becomes more critical 

With specific density, adjacency, and environmental siting requirements, careful site selection becomes even more important. Properties that meet the urban infill criteria while avoiding environmental restrictions will likely see increased value and development interest. 

Financing and risk considerations 

Reduced environmental review timelines and litigation exposure could positively impact project financing and risk assessment. However, developers should still budget for Phase I environmental assessments and potential remediation costs for sites with recognized environmental conditions. 

Navigating the transition period 

As these changes take effect immediately, developers with projects already in the pipeline should evaluate whether modifications to their approach could provide advantages under the new framework. The legislation’s limited CEQA review provisions may benefit projects that nearly qualify for exemptions but face single compliance issues. 

Documentation and compliance strategies 

Success under the new regime requires meticulous documentation of exemption qualifications and compliance with all statutory requirements. Given the expedited approval timelines, having comprehensive application materials ready becomes crucial for capturing the benefits of these reforms. 

Looking ahead: Long-term market impacts 

The Governor’s Office of Land Use and Climate Innovation will map eligible urban infill sites by July 2027, potentially expanding exemption availability. This mapping process could influence land values and development patterns across California’s metropolitan areas. 

Additionally, required updates to CEQA Guidelines every two years will likely continue refining the regulatory framework, creating ongoing opportunities for developers who stay informed about evolving requirements. 

Moving forward with confidence 

California’s CEQA reforms represent a significant shift toward streamlined development processes while maintaining environmental protections. For developers, understanding these changes and positioning projects to take advantage of new exemptions could provide substantial competitive advantages in terms of timeline, cost, and regulatory certainty. 

The key to success lies in thorough planning, careful site selection, and comprehensive compliance with the new statutory requirements. As these changes reshape California’s development landscape, staying informed and strategically positioned will be crucial for capitalizing on new opportunities. 

Ready to navigate California’s new CEQA landscape? Our real estate and regulatory teams can help you evaluate how these changes impact your development projects and identify opportunities under the new exemptions. Contact BPM today to discuss your specific situation and develop a strategic approach for your next California development project. 

When you’re buying, selling or refinancing commercial real estate, determining accurate property worth becomes critical to your success. You face an important decision: do you need a valuation, an appraisal, or both services for your commercial property transaction? 

Many commercial property owners use these terms interchangeably, but significant differences exist between commercial real estate valuations and appraisals. Understanding these distinctions helps you choose the right service for your specific needs and budget.  

CRE valuation vs CRE appraisal 

This article examines the key differences between CRE valuations and appraisals, explores when you need each service and guides you toward making informed decisions for your commercial property investments. 

What defines a commercial real estate appraisal? 

A commercial real estate appraisal provides an objective assessment of your property’s market value, conducted by licensed, certified appraisers who follow strict industry standards. These professionals complete extensive training and maintain state licenses that qualify them to produce narrative appraisals that comply to specific standards. 

The appraisal process follows a comprehensive methodology that begins with identifying the purpose and scope of your assignment. To determine a property value the licensed appraiser will: 

• Physically inspect the property 
• Examine property characteristics
• Analyze market conditions  
• Determine the highest and best use of the property 
• Research comparable sales and leases  
• Complete multiple approaches to value  
• Reconcile to a final value  

Licensed appraisers must adhere to the Uniform Standards of Professional Appraisal Practice (USPAP), which establishes ethical guidelines and performance standards for the profession. This regulatory framework ensures consistency, reliability, and legal acceptance of appraisal reports across different markets and jurisdictions. 

Commercial appraisals typically take several weeks to complete, depending on property complexity and data availability. The final report includes detailed analysis, supporting documentation and professional conclusions that courts, lenders and regulatory agencies accept as credible evidence of property value.   

When you need appraisals for commercial properties 

• Lenders require formal appraisals for most commercial real estate financing transactions, including purchases, refinancing and construction loans.  
• Financial institutions require formal appraisals to satisfy regulatory requirements such as FIRREA and protect their investment interests. 
• Estate planning and tax purposes also mandate formal appraisals. In this instance, the Internal Revenue Service requires ‘qualified appraisals’ for gift and estate tax calculations, charitable contributions, other tax-related property transfers, 
• Insurance companies often require appraisals to establish coverage limits and settle claims accurately. 
• Legal proceedings, including divorce settlements, partnership dissolutions and eminent domain cases, typically require appraisals to establish property values. Courts accept these appraisals as credible evidence because of their adherence to recognized standards and methodologies. 
• Investors seeking to establish baseline values for individual properties within a larger real estate portfolio to document their individual holdings accurately. These appraisals provide concluded values for financial reporting, partnership agreements and investment analysis purposes. 

How commercial real estate valuations differ from appraisals 

Commercial real estate valuations provide value conclusions with less narrative and a more streamlined approach compared to traditional commercial real estate appraisals. Additionally, certain types of valuations do not require licensing. Real estate professionals, analysts and property consultants can perform valuations using various methodologies tailored to your specific business needs. 

These assessments typically cost less than formal appraisals and require shorter completion timeframes. However, valuations carry limitations in their acceptable uses and may not satisfy legal or regulatory requirements that mandate certified appraisals. 

The informal nature of valuations makes them suitable for internal decision-making, preliminary assessments, and strategic planning purposes. You can use valuations to evaluate acquisition opportunities, set asking prices, or determine renovation investments without the expense and time commitment of formal appraisals. 

When valuations serve your commercial property needs 

• Property owners use valuations for preliminary market assessments when considering potential transactions. These evaluations help you understand general market positioning without committing to the expense of formal appraisals.    
• Strategic planning benefits from valuation services when evaluating multiple properties or investment scenarios. The flexible methodology allows analysts to customize approaches based on your specific investment criteria and decision-making requirements. 
• Sellers often commission valuations to establish realistic asking prices and marketing strategies. These assessments provide market insights that help position properties competitively without the detailed analysis required for formal appraisals. 
• Property management decisions, including renovation investments and lease negotiations, benefit from valuation analysis. Understanding potential returns and market positioning helps you make informed decisions about capital improvements and tenant arrangements. 

Making the right choice for your commercial property 

Your intended use determines whether you need a valuation or formal appraisal for your commercial property. Lender requirements, legal proceedings and tax purposes typically mandate formal appraisals, while internal decision-making and preliminary assessments often benefit from more flexible valuation services. 

Consider your timeline and budget when choosing between these services. Formal appraisals require more time and cost significantly more than valuations, but they provide legally defensible conclusions that satisfy regulatory requirements. 

The complexity of your property and transaction also influences your choice. Unique properties or complex ownership structures may benefit from the detailed analysis that formal appraisals provide, while straightforward properties might only require valuation assessments. 

Working with BPM for your commercial real estate needs 

BPM understands the critical importance of accurate property valuations in commercial real estate transactions. Our team provides comprehensive guidance to help you determine whether your situation requires formal appraisals or valuation services, ensuring you receive appropriate analysis for your specific needs and budget. 

Our integrated CRE valuation approach combines financial analysis, tax planning and transaction support to maximize the value of your property investments. To discuss your specific requirements and learn how our comprehensive real estate services can support your investment success, contact us.