MoldMaking Technology

MAR 2018

Advertising in MoldMaking Technology offers

Issue link: https://mmt.epubxp.com/i/943854

Contents of this Issue

Navigation

Page 40 of 51

moldmakingtechnology.com 39 CONTRIBUTOR Michael J. Devereux II, CPA, CMP is a partner and director of Manufacturing, Distribution and Plastics Industry Services at Mueller Prost LC. FOR MORE INFORMATION Mueller Prost / 314-862-2070 / mdevereux@muellerprost.com / muellerprost.com Research Incentives The Act keeps the R&D; tax credit in its current state, so moldmakers can con- tinue to use it to reduce their tax liabilities. This credit actually became more beneficial because of the decreased corporate tax rate. However, moldmakers must begin to capitalize their research expenditures that are paid or incurred in tax year 2022 and thereafter over a period of five years (or over a period of 15 years for research performed outside of the United States). Methods of Accounting Historically, most moldmakers have been required to use the accrual method of accounting in reporting their revenue and related deductions. However, for tax years beginning after December 31, 2017, mold shops with average annual gross receipts of $25 million or less for the prior three tax years may use the cash method of accounting, regardless of the shop's entity structure. That is to say that the shop will recognize revenue when it receives the cash and claim deduc- tions when the expense is paid. These shops also are exempt from accounting for inventories in a traditional manufacturing sense, meaning that they can treat their inventory as incidental supplies and deduct the inventory when it is used in the manufacturing process. Lastly, these shops will be exempt from the Uniform Capitalization (UNICAP) rules, and will not be required to capitalize their indirect expenditures and overhead into the cost of their inventory. New Limits on Deductions The Act places specific limitations on interest deduction and net operating loss- es. For tax years beginning after December 31, 2017, the deduction for net inter- est expense that a shop incurs with average annual gross receipts greater than $25 million is limited to the sum of the business interest income and 30 percent of the adjusted taxable income. Any amounts exceeding this limit may be carried forward indefinitely. Also, the net operating loss (NOL) deduction is limited to 80 percent of the taxable income for NOLs arising in tax years beginning after December 31, 2017. Excess NOLs can be carried forward indefinitely, but NOLs can no longer be carried back. Specific Deduction Eliminations The Act eliminates the deduction for entertainment expenses but preserves the limited deduction for business meals. It also eliminates the domestic production activities deduction for tax years beginning after December 31, 2017. If Congress was aiming for simplification with the Tax Cuts and Jobs Act of 2017, it missed the mark. The Treasury will be issuing significant guidance to interpret these new rules over the next couple of years. While guidance is needed, one thing is for sureā€”the overall tax liabilities of mold shops should decrease, making them more competitive in the global marketplace. Booth #135037 Robot Compact 80 With a footprint of less than 22 sq/ft, maximum transfer weight of 176 lbs, and the capacity to hold over 300 palletized workpieces, the Robot Compact 80 can easily maximize your production. The ability to load one or two machines, makes the Robot Compact 80 the ideal automation solution!

Articles in this issue

Links on this page

Archives of this issue

view archives of MoldMaking Technology - MAR 2018