Change the register, and you have changed a contract cost.
A depreciation correction does not stop at the return. The same asset lines feed the cost base that your government contracts are priced and audited against. We establish that side first, then take the deduction.
The contract side comes first.
Recent law created a genuine rush of tax-side opportunity in depreciation. A firm that reaches for it without first reading how the change lands on your contracts can hand you a deduction and an exposure in the same motion.
Depreciation is not only a tax number. For a contractor it is also a cost that flows into rates, into pricing, and into what an auditor examines. Move it on the tax side alone and the two readings separate. We read the contract side first, confirm what the change does there, and then take the tax position, at a level of thoroughness the middle market rarely gets.
That order is the discipline. Tax expertise in this area is a commodity. Reading the contract consequence before the tax benefit is not.
Every line. Not a sample.
The Depreciation Review reads your entire fixed-asset register for four things: recovery period, depreciation method, convention, and bonus treatment under Internal Revenue Code (IRC) §168.
Classification runs against the Modified Accelerated Cost Recovery System (MACRS) asset-class tables, line by line, rather than by carrying book lives onto the tax schedule.
Bonus treatment is tested against the statute as it now stands. The 100% first-year deduction is permanent for property acquired and placed in service after January 19, 2025, while earlier acquisitions remain on the prior phase-down schedule. That is a two-date test, and a lookup keyed only to the placed-in-service year gets it wrong.
The transition population is folded into scope: pre-2025 acquisitions on the old schedule sitting alongside current-law additions at 100%.
The §1245 and §1250 recapture screen runs, so the recapture picture is known before a position is taken rather than after.
Where your contracts are covered by the Cost Accounting Standards (CAS), the book, contract-cost, and tax three-view reconciliation is in scope. Those three views are supposed to differ. What they are not supposed to do is drift apart without anyone deciding they should.
Years of understated depreciation become cash this year.
Where treatment is wrong, the fix is not an amended return. It is a change in method of accounting. The cumulative under-claimed depreciation for all prior years is captured as a §481(a) adjustment on Form 3115, typically as a single current-year deduction under the automatic consent procedures, and the corrected register carries the right methods forward.
One Depreciation Review Report, delivered as a PDF prepared for the named client: the register read; each misstatement as a documented finding carrying the authority it rests on; the per-asset §481(a) computation with sign and spread treatment; the corrected classifications to carry forward; and, at Tier 2, the filed Form 3115.
You choose the delivery tier.
FactorTax delivers the analysis and the filing-ready documentation, built to withstand examination. Your tax provider implements it.
FactorTax delivers the study and implements it end to end, preparing and filing the accounting-method change and signing as practitioner of record under Treasury Circular 230.
Every engagement is a single flat fee, fixed in the engagement letter before work begins. No ranges, no hourly billing, and no fee that moves with the size of the result.