Section 174 Repeal & the 2025 BOI Reset:
A Year-End Books Checklist

Section 174 Repeal & the 2025 BOI Reset: A Checklist for US Small Businesses to Reopen Their Books Before Year-End

2025 delivered two of the most consequential, and most misunderstood, shifts US small businesses have faced in years. One restored a deduction that had quietly drained cash from innovative companies since 2022. The other un-did a federal filing obligation that thousands of owners spent the prior winter scrambling to meet. Both demand that you go back into your books and adjust now, before year-end closes the window on the cleanest options.

If you’re handling Section 174 repeal 2025 bookkeeping in-house, or you’re still unsure where BOI reporting leaves your small business for 2025, this is your technical, actionable checklist. We’ll cover what changed, what to fix in your ledgers, and where the real deadlines sit.

This article is general information, not tax or legal advice. R&D elections and the catch-up mechanics are fact-specific, and the BOI/Corporate Transparency Act landscape remains in regulatory flux. Confirm your position with your CPA before filing.

Part 1: The Section 174 Repeal, Domestic R&D Expensing Is Back

For tax years beginning after December 31, 2021, the Tax Cuts and Jobs Act forced businesses to capitalize and amortize research and experimental (R&E) costs, domestic over five years, foreign over fifteen. For R&D-heavy small businesses, that turned a cash-flow-friendly deduction into a phantom tax bill.

The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, reversed it. New Section 174A permanently restores the option to fully deduct domestic R&E expenditures in the year incurred, effective for tax years beginning after December 31, 2024. The IRS followed with Revenue Procedure 2025-28 (released August 28, 2025) detailing the elections and transition rules.

Three things every small business needs to internalize:

  • Domestic R&E is immediately deductible again for 2025 forward (or you may elect to amortize over no fewer than 60 months).
  • Foreign R&E is unchanged, it still must be capitalized and amortized over 15 years.
  • The 2022–2024 capitalized balance can be recovered, and how you recover it depends on your size.

The OBBBA R&D Deduction Catch-Up: Your Options for 2022–2024

This is where the OBBBA R&D deduction catch-up gets fact-specific. The path forks based on the Section 448(c) gross receipts test (broadly, average annual gross receipts at or under roughly $31 million for the relevant period):

  • Eligible small businesses may elect retroactive expensing by amending all affected 2022, 2023, and 2024 returns. This is all-or-nothing, you cannot pick and choose which years to amend. Done correctly, it can unlock refunds.
  • Larger businesses generally cannot amend, but may accelerate the remaining unamortized 2022–2024 domestic balance, deducting it entirely in 2025, spreading it across 2025 and 2026, or continuing the original amortization.
  • Per Rev. Proc. 2025-28, the catch-up election is generally made by attaching a statement to the return, Form 3115 is not required for this transition.

Year-End Bookkeeping Checklist: Section 174 / R&D

  • Isolate R&E in your GL.
    Confirm domestic vs. foreign R&E costs are cleanly segregated, the two get opposite treatment.
  • Rebuild the 2022–2024 amortization schedule.
    Quantify the remaining unamortized domestic balance carried on the books.
  • Run the size test.
    Determine eligibility under the §448(c) gross receipts threshold to know whether retroactive amendment is even on the table.
  • Model the scenarios.
    Compare amend-all-years vs. one-year acceleration vs. two-year acceleration vs. continued amortization, including the cash and §163(j) interest-limitation effects.
  • Coordinate the R&D credit.
    OBBBA reinstated pre-TCJA Section 280C mechanics; decide between the full credit (reducing the deduction) or the reduced-credit §280C(c) election.
  • Adjust deferred tax accounts.
    The treatment change ripples into your deferred tax assets/liabilities, true these up.
  • Document the election.
    Draft the attached-statement election language to support the chosen method.

Part 2: The 2025 BOI Reset, What Actually Applies to Your Small Business

Here’s the headline that cuts against a lot of stale advice still circulating: most US small businesses no longer have a federal BOI filing obligation.

After the late-2024 enforcement whiplash, FinCEN issued an interim final rule effective March 26, 2025 that redefined “reporting company” to cover only entities formed under foreign law that have registered to do business in a US state or tribal jurisdiction. The rule exempts all US-formed entities, and US persons, from beneficial ownership information (BOI) reporting under the Corporate Transparency Act. That exemption remains in effect; FinCEN has not yet finalized the rule, and the Eleventh Circuit’s 2025 decision upholding the CTA’s constitutionality did not disturb the domestic exemption.

What this means in practice for BOI reporting and your 2025 small business filings:

  • US-formed LLCs and corporations: Generally no federal BOI report required, and no obligation to update or correct a previously filed report.
  • Foreign reporting companies (formed abroad, registered to do business in the US) the obligation remains, with its own filing deadlines.
  • Don’t shred the file. This is an interim rule in a historically volatile area. A future final rule could shift the scope, so retain your beneficial-ownership documentation.

The Real 2025–2026 Watch-Item: State-Level Transparency Laws

While the federal requirement receded, states moved in. Most notably, New York’s LLC Transparency Act took effect January 1, 2026, imposing its own beneficial-ownership disclosure (or exemption attestation) on LLCs formed or registered in New York, and California has been advancing comparable legislation. The federal sigh of relief does not automatically cover you at the state level.

Year-End Checklist: BOI / Beneficial Ownership

  • Confirm entity origin. US-formed vs. foreign-formed determines whether the federal requirement touches you at all.
  • Verify foreign-entity filings. If any entity in your structure is foreign-formed and US-registered, confirm its BOI report is filed and current.
  • Map your state footprint. Identify every state where you’re formed or qualified, and check for state-level transparency acts (New York is live; watch California).
  • Retain ownership records. Keep beneficial-ownership data and prior filings on hand against a future federal final rule.
  • Update your compliance calendar. Replace the old federal CTA deadline with the obligations that actually apply to your structure today.

Why Get a Specialist to Reopen the Books

Both of these changes share a trap: the default treatment on your books is now almost certainly wrong for 2025, and the most valuable options (retroactive R&D amendments, the cleanest catch-up election) are time-sensitive. Getting the GL segregation, amortization unwind, deferred-tax adjustments, and election documentation right is detailed, multi-year work, exactly the kind of catch-up that goes sideways when squeezed in around a year-end close.

Accendro Accounting LLP specializes in precisely these complex, compliance-driven book adjustments for US small businesses and the CPA firms that serve them, from rebuilding R&E amortization schedules and modeling the OBBBA catch-up options to mapping your post-reset reporting obligations across federal and state lines.

If your firm has ever lost a week of billable capacity to a resignation, let’s talk about how zero-downtime continuity changes that math.
Contact Accendro before year-end to reopen your books accurately, capture the R&D recovery you’re entitled to, and confirm exactly which transparency obligations still apply to your entities.

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