MoldMaking Technology

SEP 2018

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Page 47 of 67

46 MoldMaking Technology —— SEPTEMBER 2018 THE BOTTOM CONTRIBUTOR Michael J. Devereux II, CPA, CMP is a partner and director of manufacturing, distribution and plastics industry services at Mueller Prost. The Act limits the deduction for the net interest expense (which is defined as interest expense, less interest income) that is incurred by a mold shop to 30 percent of the shop's adjusted taxable income. For the first four years that this provision is in effect (tax years 2018 through 2021), adjusted taxable income means taxable income determined without regard to deprecia- tion or amortization. For tax years 2022 and beyond, adjusted taxable income takes into account deductions for depreciation and amortization. Disallowed interest expense is carried forward to future tax years indefinitely. Net Operating Losses Before the Act, net operating losses (NOLs) could be carried back to the company's two prior tax years to offset income in those years, allowing shops to request refunds from prior years. Also, NOLs could be carried forward for 20 tax years, allowing the shop to offset future income of the company. Further, there was no limita- tion on the amount of taxable income that shops could offset for regular income tax purposes before the Act. For losses arising in tax years begin- ning after December 31, 2017, the Act limits the net-operating-loss deduction to 80 percent of the taxable income of the year in which the loss is carried. Also, the NOL carryback provisions are repealed for tax years ending after December 31, 2017, and shops may carry forward those NOLs indefinitely. As a result, a fiscal-year mold shop with a tax year ending after December 31, 2017 may not carry back NOLs arising in its tax year that includes December 31, 2017. While the Act is likely to reduce the federal income tax liabilities for most mold shops, mold builders should eval- uate the changes to determine how the changes may impact their tax liabilities in 2018 and beyond. FOR MORE INFORMATION Mueller Prost 314-862-2070 The Act disallows a deduction for business entertainment expenses effective January 1, 2018. Imagine: Simulation Injection molding simulation using Sigmasoft®, Moldex3D, and Autodesk® Moldflow Insight Optimization Hands-on optimization of the mold design, part design, and injection molding process Evaluation Evaluation of polymer and resin selections, in-mold sensors, and current process procedures Consultation Real-world consultation, including process monitoring and control strategies, research and development, and training and workshops launching a perfect tool the first time.

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