Yes. Unlike Section 179 expensing, bonus depreciation can create or increase a net operating loss. Under current law (post-TCJA), NOLs can be carried forward indefinitely but can only offset up to 80% of taxable income in future years. This means if your bonus depreciation deduction exceeds your taxable income, the excess creates an NOL that provides tax benefits in future years. This is particularly powerful for the Roth conversion strategy, where the large deduction can offset the conversion income and potentially create an NOL.
