MoldMaking Technology

OCT 2018

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Page 39 of 51

38 MoldMaking Technology —— OCTOBER 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 LC. Elections Bonus depreciation is automatic unless a shop instead elects a particular class life. Mold shops must make an election for each class life for which it does not want bonus depreciation. For example, if a shop elects out for all seven-year assets, it would claim bonus depreciation on all otherwise eligible assets and depreciate the seven-year assets under the normal MACRS rules. U.S. Treasury regulations do not make any changes to these rules. However, given the overlap of the --percent bonus depre- ciation that existed before tax reform and the new €---per- cent bonus depreciation, transition rules are necessary. The €---percent bonus depreciation is automatic. Mold shops also can elect out of the €---percent bonus depreciation in favor of the --percent bonus depreciation. However, such election would apply to all property for which bonus depre- ciation is eligible and not by class life. Technical Corrections While unlikely to pass during an elec- tion year, Congress is considering a technical correction bill related to tax reform. One of the more prominent provisions relates to the class life of quali…ied improvement property placed in service after December ‡€, ˆ-€‰. The Congressional writers intended a € -year period, making it eligible for bonus depreciation. However, because of a drafting error, quali…ied improve- ment property placed in service after December ‡€, ˆ-€‰ is a ‡Š-year property. The bottom line is that because of the increased percentage of bonus depreciation from --percent to €---percent and the broad de…inition of eligible assets to include any MACRS property with a class life of ˆ- years or less, mold shops can bene…it greatly from the new bonus depreciation rules. Many shops should consider cost segregation on their plant and property because by segregating the real proper- ty (typically ‡Š-year life property) from personal property (typically € -year life property or less), they will be able to depreciate their capital assets more quickly. FOR MORE INFORMATION Mueller Prost 314-862-2070 ZZZFXPVDFRP 130%6$5'0$64 .BJOCFOFmUT #3"/%-/&84."35803.1*/'035)&3&-&"4&0'4."-- 6/%&3$654 'VMMZNFDIBOJDBMTPMVUJPO %PFTOPUOFFEBOZNFDIBOJTN JOUIFFKFDUPSQMBUFT"OEJUT CFOEBCMFDPSF VQUP° BMMPXTGPSUIFSFMFBTFPG TNBMMVOEFSDVUTCZPOMZ QVTIJOHVQGSPNUIF FKFDUPSQMBUFT &BTZBTTFNCMZBOE JOTUBMMBUJPO 5IF4NBSU8PSN1JODPNFTJOTJzFTØBOEØNNBOEUXP EJGGFSFOUMFOHUITEFQFOEJOH POUIFFKFDUPSTUSPLFSFRVJSFEFJUIFSVQ 950 Stephenson Hwy Troy, MI 48083 WP 6/%&3$6544."35W03.P*/ $0.*/(400/ '"-- &806$ &806$ 3NNPSVQUPNN 1 248 850 8385

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