Spring 2018 issue of Horizons

INDUSTRY UPDATE MANUFACTURING & DISTRIBUTION

Manufacturers and Distributors Feel Effect of Sweeping Tax Reform by Henry Rzonca, CPA

T he Tax Cuts and Jobs Act (the Act) passed in December 2017 has provided many changes related to manufacturing and distribution businesses. The following is a summary of these key changes from the Act.

Entertainment Expense Disallowance Expenses for entertainment, amusement or recreation are no longer 50% deductible. This includes expenses for entertainment directly related to the active conduct of a trade or business. Also disallowed are dues paid to a club organized for business, pleasure, recreation or other social purpose, facility expenses for entertainment and qualified transportation fringe benefits such as subsidized parking.

Tax Rates The individual income tax rates

(that would apply to many partnerships, S corporations and sole proprietorships) and the regular (C corporation), tax rates have been reduced. The top individual rate has decreased from 39.6% to 37%. The rate for C corporations has decreased from a top rate of 35% to a flat rate of 21%.

30 Manufacturers and Distributors Feel Effect of Sweeping Tax Reform