INDUSTRY t page 49
$25 million or less for the prior three tax years may use the cash method of accounting, regardless of the company’s entity structure. That is, the processor will recognize revenue when it receives the cash and claim deductions when the expense is paid. Further, taxpayers with less than $25 million of average annual gross receipts for the prior three tax years are exempt from the requirement to account for inventories in a traditional manufacturing sense. Thus, processors will be able to treat their inventory as incidental supplies and deduct the inventory when it is used in the manufacturing process. In addition, plastics processors falling under the $25 million threshold will be exempt from the UNICAP rules, and therefore not required to capitalize their indirect expenditures and overhead into the cost of their inventory. The Act eliminates the deduction for entertainment expenses, while preserving the limited deduction for business meals. Further, the Act eliminates the domestic production activities deduction for tax years beginning after Dec. 31, 2017. Many of the provisions of the Act are favorable to plastics processors, and processors’ federal tax liabilities should
New Individual Tax Rates Married Filing Jointly and Surviving Spouses n 10% (Taxable income not over $19,050) n 12% (Over $19,050 but not over $77,400) n 22% (Over $77,400 but not over $165,000) n 24% (Over $165,000 but not over $315,000) n 32% (Over $315,000 but not over $400,000) n 35% (Over $400,000 but not over 600,000) n 37% (over $600,000) Single Individuals & Married Filing Separately n 10% (Taxable income not over $9,525) n 12% (Over $9,525 but not over $38,700) n 22% (Over $38,700 but not over $82,500) n 24% (Over $82,500 but not over $157,500) n 32% (Over $157,500 but not over $200,000) n 35% (Over $200,000 but not over $300,000) n 37% (Over $300,000) Head of Household n 10% (Taxable income not over $13,600) n 12% (Over $13,600 but not over $51,800) n 22% (Over $51,800 but not over $82,500) n 24% (Over $82,500 but not over $157,500) n 32% (Over $157,500 but not over $200,000) n 35% (Over $200,000 but not over $500,000) n 37% (Over $500,000) decrease. Careful planning, however, may be necessary to ensure all benefits and incentives are recognized. n
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50 | plastics business • 2018 Issue 1
Michael J. Devereux II, CPA, CMP, is a partner and director of Manufacturing, Distribution & Plastics Industry Services for Mueller Prost. Devereux’s primary focus is on tax incentives for the manufacturing sector. He serves on MAPP’s Board of Directors and has been a MAPP sponsor since 2006. Mueller Prost’s Tax Incentives Group is nationally recognized and has assisted numerous companies in the plastics industry capture these benefits. For more information, email mdevereux@muellerprost.com or call 314.862.2070.