Turning taxes into opportunity: A family approach to building wealth

Leonard & Associates CPAs has never been just a business to me. It’s a continuation of something my father, Bernard Leonard, built from the ground up.

He started this firm in Elmwood Park with a simple belief: take care of people, treat them right, and the rest will follow. Over time, his clients became more than clients — we see them as valued relationships, friendships, and in many ways, an extension of our family.

A number of years ago, I moved the firm to Oak Park, but I carried that same philosophy with me. To this day, I don’t view the work we do as just preparing tax returns. I see it as helping people make decisions, navigate challenges, and work toward the goals that matter most to them. When you sit across from someone year after year, you get to know their story, their business, their family, and their goals. That’s what makes our work meaningful.

Recently, under new federal legislation often referred to as the “Big Beautiful Bill,” 100% bonus depreciation was brought back. On the surface, that may sound like just another tax law change. But for the right clients, it creates real opportunities — opportunities to save money, reinvest, and move closer to what they’d like to achieve.

Bonus depreciation allows taxpayers to deduct the full cost of certain assets in the year they are placed into service, rather than spreading those deductions out over decades. But where this really becomes powerful or what I often call the “magic” is when it’s combined with cost segregation.

Cost segregation takes a property and breaks it down into its individual components. Instead of treating the entire building as one asset depreciated over 27.5 or 39 years, it identifies parts of the property. Items like flooring, appliances, electrical components, and land improvements can now be depreciated over much shorter time periods.

Allow me to provide you with a real-world example.

Say a client purchases a rental property for $1,000,000. Under normal depreciation rules, that property would be written off slowly over 27.5 years, resulting in roughly $36,000 of depreciation per year.

But with a cost segregation study, it’s not uncommon to identify around 40% of the purchase price as short-life assets. In this case, that would be about $400,000.

With 100% bonus depreciation now back in place, that $400,000 can potentially be written off in the first year.

Instead of a $36,000 deduction, the client now has a $400,000 deduction in year one!

For a high-income taxpayer, that could translate into well over $100,000 in actual tax savings, depending on their situation.

That’s the “magic.” It’s not about bending the rules it’s about understanding them and using them correctly.

For certain clients, particularly those with higher incomes, there is an additional opportunity through short-term rental properties. When structured properly, these properties can allow those large depreciation deductions to offset other income like wages or business income creating even greater tax benefits.

And this is where I often have a very real conversation with clients.

At the end of the day, you’re going to pay the tax you can pay it to Uncle Sam, or you can use that same money to invest in an asset. When done correctly, that investment can reduce your taxable income while at the same time give you something of value in return.

Instead of simply writing a check to the government, you may be able to acquire a property, build equity, and create long-term wealth. Now you don’t just have a tax payment, you have an asset in your portfolio.

That doesn’t mean it’s right for everyone. These strategies need to be thought through carefully. But for the right person, it can completely change the conversation from “what do I owe?” to “how do I plan?”

Over the years, I’ve come to realize that this profession is really about trust. People trust me with their financial lives, and that’s something I take very seriously. It’s something my father believed in, and it’s something I carry with me every day.

The return of 100% bonus depreciation is a powerful opportunity, but more importantly, it’s a reminder that with the right guidance, the tax code can be used to truly benefit people.

For me, continuing dad’s legacy is about more than carrying on a name. It’s about continuing a way of doing things, building relationships, being there for our clients, and helping them move forward with confidence.

That’s what my father started. And that’s what I intend to continue.

• Michael Leonard is the managing partner of Leonard & Associates CPAs, a 50+ year legacy accounting/CPA firm in Oak Park.