tax law changes

Charlotte ChamberLand Use & Transportation

October 30, 2013

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New Tax Law Changes for 2013:The Good

• 50% Bonus Depreciation stays in effect for new assets placed in use in 2013

• Section 179 Expense – Up to $500,000 of business assets can be expensed (reduced dollar for dollar after more than $2m of assets are put in service)

• 15 Year Recovery period for qualified leasehold improvements, qualified retail improvements and qualified restaurant property

• Standard Mileage Allowance for business driving increased to 56.5 cents per mile

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Still In Effect – 2013The Good

Manufacturers Deduction (Qualified Production Activities Deduction – Section 199)– 9% of lesser of:• QPAI or• Taxable income without regard to this deduction

– Not to exceed 50% of W-2 wages paid

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Still in Effect - 2013The Good

R&D Tax Credit– 20% of expenses over base amount– Meets 4 requirements:• New or improved business component• Technological in nature• Elimination of Uncertainty

Solar / Roof Top• Federal Tax Credit + Depreciation• Great for Flat Roof Applications

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Expiring At the End of 2013The Bad

• Section 179 – Rolls Back to $25,000 / $200,000• Qualified Improvements – 39 Years• Bonus Deprecation All But Goes Away• R&D Credit• Solar (2016)

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Manufacturer Tax Issues

IC-DISC Tax Breaks for Exporters– Corporation must qualify as an IC-DISC– Exporter entity pays the IC-DISC commissions– Dividends to shareholders only taxed at lower qualified

dividend rate– Modest interest payments made to the IRS in the

instance of deferrals (up to $10m)– 95% of Sales / Assets attributable to foreign exports– 50% of goods manufactured in US– 4% of Sales / 50% of net income qualifies

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