Immediate Expensing in the U.S.: Key Considerations for Brazilian Companies

Business in the U.S. | Companies in Brazil | Companies in the U.S.

Understanding Immediate Expensing in the U.S. Tax System

Immediate expensing—commonly referred to as 100% bonus depreciation—allows businesses to deduct the full cost of eligible assets in the year they are placed in service, rather than spreading the deduction over multiple years.

Expanded under the Tax Cuts and Jobs Act (TCJA) of 2017, this provision has become a strong incentive for companies investing in equipment, technology, and infrastructure in the United States.

For Brazilian companies operating in the U.S., immediate expensing presents both a financial opportunity and a compliance consideration. While it can significantly reduce taxable income in the short term, it also impacts long-term tax strategy and cross-border financial planning.

Why Immediate Expensing Matters

• Cash Flow Efficiency – Accelerating deductions improves liquidity and allows reinvestment into U.S. operations
• International Tax Planning – Timing differences in profit recognition can affect Brazil–U.S. tax alignment and transfer pricing strategies
• Sector Impact – Capital-intensive industries such as manufacturing, logistics, and technology benefit the most
• Phase-Out Timeline – Bonus depreciation is being reduced by 20% annually (starting in 2023) and is scheduled to be fully eliminated by 2027, making timing critical

Key Considerations for Brazilian-Owned U.S. Entities

Asset Qualification
Only certain types of property qualify, including machinery, equipment, and some improvements. Real estate and intangible assets are generally excluded.

Interaction with Section 179
Section 179 also allows immediate deductions but comes with caps and phase-out thresholds. Coordinating both provisions strategically is essential.

State-Level Variations
Not all states follow federal rules on bonus depreciation. Companies must evaluate state-specific treatment to avoid unexpected tax exposure.

Cross-Border Reporting Alignment
Brazilian parent companies must reconcile U.S. tax deductions with local accounting standards (GAAP or IFRS), ensuring consistency in consolidated financial statements.

Practical Steps for Implementation

• Review investment timing to take advantage of remaining bonus depreciation benefits
• Model tax outcomes to balance current deductions with future tax liabilities
• Align with transfer pricing policies to avoid inconsistencies across jurisdictions
• Work with advisors experienced in international tax structures

Final Takeaway

Immediate expensing remains a valuable tool for companies expanding in the United States. For Brazilian businesses, it can unlock meaningful tax savings—but only when applied within a well-structured global tax strategy.

With the provision gradually being phased out, companies that act early and plan effectively will be in a stronger position to benefit.

Need guidance on U.S. tax incentives and cross-border strategy?
Work with Zecca Ross Law to ensure your investments are structured efficiently, compliant, and aligned with your global business goals.

‍