LAKE LAS VEGAS, NEV. — The Tax Increase Prevention Act. It's a name only a politician — or an accountant — could love.
But it can save manufacturing companies money, Michael Devereux II said at the Plastics News Executive Forum.
The act extended some tax incentives through 2014, including the 50 percent bonus depreciation for capital investments and the federal research and development tax credit.
Devereux said too many plastics processors do not take advantage of the R&D tax credit.
“If you haven't looked at this, it's significant. Companies can drastically reduce their tax liabilities,” he said. And there is a new simplified credit on amended tax returns.
Devereux said the credit can cover basic areas such as in-house design of a mold, a special piece of equipment, even end-of-arm tooling or labeling equipment. Companies have to properly account for the time and effort spent on the research.
He said the court case last year, Suder vs. the Internal Revenue Service, made it clear the R&D tax credit is available for a broad range of activities.
Devereux outlined other tax issues at the Executive Forum.
New IRS tangible property regulations are effective for 2014. Companies that own their building or equipment need to make changes to the accounting method, and file additional forms, he said.
Another is an additional so-called Medicare surtax on certain investment income, of the Affordable Care Act.
Devereux is a partner and director of manufacturing and distribution services at Mueller Prost LC in St. Louis.
He also talked about tax matters when planning a sale of a business. These include estate planning and deducting a portion of success-based fees.
Company owners also should understand the concept of personal goodwill, which resides with the person, not the company.