Entity Setup
Entity Setup for Startups: Leveraging U.S. QPP and Immediate Expensing Under IRA Rules
Start-ups acquiring qualified property after January 19, 2025 can benefit from powerful depreciation and expensing rules — here’s what to know and how to apply them.
By NomadicTax Research Team • 5-8 min read • April 7, 2026
## Qualified Property (QPP) & Immediate Expensing: Big Incentives
U.S. **Notice 2026-11** gives interim guidance for property qualifying for full expensing or accelerated depreciation under sec. 168(n) and related provisions in the Inflation Reduction Act/other legislation. ([irs.gov](https://www.irs.gov/irb/2026-11_IRB?utm_source=openai))
This includes buildings used for manufacturing or processing acquired after **January 19, 2025**, that are placed in service before final regulations are issued. You can rely on guidance provided in sections 3-8 of the Notice. ([irs.gov](https://www.irs.gov/irb/2026-11_IRB?utm_source=openai))
## How to Structure Your Entity for Maximum Benefit
- **Acquire or begin construction of eligible assets after January 19, 2025**, like manufacturing or processing facilities. Those are eligible under the interim guidance. ([irs.gov](https://www.irs.gov/irb/2026-11_IRB?utm_source=openai))
- **Place those assets in service** before final regulations are published. Be proactive—don’t wait for full regulatory clarity if your assets meet current guidance. ([irs.gov](https://www.irs.gov/irb/2026-11_IRB?utm_source=openai))
- **Ensure entity form aligns with asset ownership**: partnerships or corporations claiming immediate expensing need compatible ownership, basis, and property use documents.
## Example Walkthroughs
- **Startup A** builds a small food processing facility starting February 1, 2025, completing it in late 2025. Under interim guidance, they can immediately expense relevant property in tax year starting after it’s placed in service — even if final rules aren’t published yet. ([irs.gov](https://www.irs.gov/irb/2026-11_IRB?utm_source=openai))
- **Startup B** plans an investment in equipment in early 2025, but places it in service in mid-2026. That still qualifies under interim guidance, so long as equipment construction began after January 19, 2025 and the entity follows sections 3-8 of Notice 2026-11. ([irs.gov](https://www.irs.gov/irb/2026-11_IRB?utm_source=openai))
## Key Due Diligence & Risk Management
- Maintain full records of **construction start dates, acquisition dates, in-service dates**, and ensure compliance with definitions of “manufacturing,” “processing,” and “substantial transformation.” Any ambiguity may risk IRS rejecting claimed benefits. ([irs.gov](https://www.irs.gov/irb/2026-11_IRB?utm_source=openai))
- Monitor final proposed regulations. They may adjust definitions or limit categories—align current behavior with expected guidance (don’t stretch beyond what interim notice explicitly allows).
- Consider tax elections carefully: once you rely on guidance in sections 3-8 for all eligible property in a taxable year, that election is significant. Ensure consistent treatment. ([irs.gov](https://www.irs.gov/irb/2026-11_IRB?utm_source=openai))
## Take-Homes for New and Early-Stage Entities
- If you're acquiring assets now (after Jan 19, 2025), immediate expensing could deliver a major cash-flow benefit (deducting full cost in first year vs depreciation over decades).
- Plan asset acquisitions and entity capitalization so you can maximize deductions without stretching statutory definitions.
- Talk to your tax advisor about alternative minimum tax (AMT) interactions—some full expensing provisions may trigger AMT issues depending on state and local law.
## Bottom Line
The interim guidance in IRS Notice 2026-11 allows many U.S. startups to front-load deductions for eligible properties placed in service. If you're planning manufacturing, processing, or other eligible investments, aligning acquisition and service timing with these rules can unlock tremendous tax savings.