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MANUFACTURING & WHOLESALE DISTRIBUTION INDUSTRY NEWS
September/October 2018
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Upcoming Events
REMINDER: Tax Implications of The Wayfair Decision and State Law Changes Seminar
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Louisville Event
Wednesday, September 26, 2018
Registration: 7:30 AM - 8:00 AM EDT
Program: 8:00 AM - 10:00 AM EDT
Pendennis Club
218 W Muhammad Ali Blvd, Louisville, KY
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Evansville Event
Tuesday, October 2, 2018
Registration: 7:45 AM - 8:00 AM CDT
Program: 8:00 AM - 10:00 AM CDT
Evansville Country Club
3810 Stringtown Road, Evansville, IN
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REGISTER NOW!
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REGISTER NOW!
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MMA Manufacturing Day in America
Date: Thursday, October 18, 2018
Time: 5:00 PM - 7:00 PM EDT
Location: Harding, Shymanski & Company, P.S.C.
The Madrid Conference Center
545 S Third Street, Louisville, KY 40202
Wine & Spirits, Heavy Hors d'oeuvres and Networking
TSMA Q4: Trends, Tariffs and Trade
Date: Monday, October 29, 2018
Time: 3:00 PM - 5:30 PM CDT
Location: DoubleTree by Hilton, 601 Walnut Street, Evansville IN 47708
Join other TSMA members as Steve Menaker speaks at the TSMA Q4 event in October. Fresh from the September NAM Meeting in Washington, D.C., Menaker will share insights on trends in manufacturing, including the digital transformation and labor market, as well as the impact of tariffs and trade wars on domestic and international manufacturing.
Steve Menaker, CPA and Audit Partner at RSM US LLP, is currently the board member representing RSM US LLP at The National Association of Manufacturers (NAM). Menaker has more than 30 years of experience in public accounting and currently serves as the firm's National Industrial Products (IP) Industry Leader. In this role, Menaker coordinates and supports the firm's commitment to these industries. He focuses on the manufacturing sector while overseeing the various sector teams under the IP umbrella.
3:00 - 3:30 PM Registration
3:30 - 4:30 PM Program
4:30 - 5:30 PM Manufacturing Day in America Reception
Fees/Admission: Free for TSMA members and Harding, Shymanski & Company, P.S.C. clients; $50 for non-TSMA members.
To register contact Dorothy Pergola, TSMA Coordinator, at 812.425.8147 or email [email protected].
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South Dakota vs. Wayfair: Final Decision
The U.S. Supreme Court has issued its highly anticipated decision in South Dakota v. Wayfair, paving the way for states to impose economic sales tax nexus standards on remote retailers.
The decision overrules the previous Supreme Court ruling in Quill v. North Dakota that required a physical presence sales tax nexus standard. This decision will have significant implications for almost all industries, but especially consumer products (retailers) and industrial products.
With a new sales tax nexus standard established, more states will require all retailers that sell within their borders to collect that state's sales tax. About a dozen states have already addressed economic nexus laws or regulations.
Wayfair,
however, has created many more questions than answers. Adapting your business to the new sales and use tax landscape will take time, even though you may need to react quickly. Read the full decision
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Opportunity Zones Created under 2018 Tax Cut and Jobs Act
The 2017 Tax Cut and Jobs Act provides tax incentives for investment in low- income communities designated as Opportunity Zones. The Opportunity Zone program's incentives for capital investment are tied to deferral on recognized capital gains. The program offers several types of incentives including temporary tax deferral, step-up in basis, and potential permanent exclusion of taxable income.
The temporary deferral stems from capital gains reinvested in the Opportunity Fund. The deferred gain must be recognized on the earlier of the date the investment is sold or December 31, 2026. A step-up in basis increases the basis of the investment in the Opportunity Fund by 10% if it is held for at least 5 years and by 5% if held for at least 7 years, allowing exclusion of the original gain of up to 15%. Permanent exclusion of the capital gains from the sale or exchange of an investment in an Opportunity fund is possible if the fund is held for at least 10 years.
To learn more about the benefits of Opportunity Funds please click here or contact Aaron Wilzbacher, CPA at 800.880.7800 ext. 1322, [email protected].
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Tax Reform Impact: S Corp Owner Compensation and M&E Deductions
The Tax Cuts and Jobs Act (TCJA) created the new Qualified Business Income Deduction ("QBID") for pass-through entities, which has dominated much of the tax planning discussions in recent months. The purpose of the 20% QBID is to allow pass-through owners to realize a reduction in their tax burden comparable to the reduction received by C corporations. As with many tax deductions, limitations come into play when calculating the QBID. One such limitation states that taxpayers are restricted to taking the greater of 50% of their share of W-2 wages, or 25% of W-2 wages plus 2.5% of the unadjusted basis of qualifying property within the corporation.
For S corporation owners, this may present a planning opportunity to increase the size of the QBID. In scenarios where S corporations can reasonably adjust owners' salaries, the QBID could be increased. Be aware that overall shareholder compensation must still be considered reasonable in order to be valid, so appropriate support for any change in shareholder compensation level is a must.
Another major change brought about by the TCJA relates to the treatment of meals and entertainment deductions. Pre-TCJA, businesses generally deducted 50% of most meals and entertainment expenses.
But under the new law, most entertainment expenses are completely nondeductible, with a few exceptions.
- Entertainment (tickets to events, golf with client, etc.) - 100% nondeductible.
- Meals with clients, customers, or prospects at an entertainment activity (for example, meals at a sporting event or golf outing) - 100% nondeductible.
- Meals with clients, customers, or prospects with substantial business discussions - 50% deductible, although some are interpreting the law to say these expenditures are 100% nondeductible. More guidance from the IRS is needed on this.
- Meals with clients, customers, or prospects without substantial business discussions - 100% nondeductible.
- On-premise meals provided for the convenience of the employer (such as lunch or dinner provided to employees while working) - 50% deductible until Jan 1, 2026.
- Meal reimbursements for employees while traveling on business - 50% deductible.
- Holiday party or similar social events for employees - 100% deductible.
The IRS has promised that additional guidance will be issued on this topic, but it is uncertain when a definitive answer will be provided. Businesses should begin reviewing their processes for capturing meals and entertainment expenses to both take advantage of the exceptions provided by the new law, and to provide appropriate reporting on newly nondeductible items.
To learn more about re-examining S corporation compensation or meals and entertainment, contact John Rittichier, CPA at 800.880.7800 ext. 8484 or at [email protected].
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Buying Preferences that are Transforming b2b
Manufacturers' business-to-business buying processes have evolved over time. While customers still find quality and price valuable, other aspects of the buying process have achieved higher importance. The following are things to consider when evaluating your selling pitch to the customer's new perspective:
- Have you budgeted for a longer buying process?
- Are you aware of how and where buyers are researching your product?
- Are you familiar with all the parties you are selling to other than the buying agent and what aspects of your product interests that specific party?
- Have you developed a network of channels to deliver your product message to the buyer outside of direct communication?
For more information on how your company can adapt to the new buying process, click here or contact Scott Olinger, CPA, CGMA, CPIM at 800.880.7800 ext. 8466 or at [email protected].
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ABOUT OUR MANUFACTURING & WHOLESALE DISTRIBUTION INDUSTRY TEAM
From increased competition and continuous quality improvement
demands to rising employee benefit costs and declining margins, manufacturers and wholesale distributors are facing greater challenges than ever before. In addition to the services you would expect from an accounting firm, we have a dedicated team ready to assist you with the unique challenges and issues facing your industry.
A number of our staff members belong to The Association for Operations Management (APICS) with some having achieved the CPIM and CIRM certifications. We understand your key issues and possess the drive and determination to help you manage your company on a proactive basis. This commitment positions us at the cutting edge of the industry and enables us to spot trends and deal quickly with the issues your company may be facing.
If you are interested in additional news or event information, stay connected through our website and industry newsletters or follow our LinkedIn Company page.
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SEE WHAT OUR CLIENTS ARE SAYING...
L &D Mail Masters has grown from a small, home based business to a full-service direct marketing provider with over 135 full-time staff members and 188,000 square feet of production and storage space. Through that period of growth, it became apparent that we needed more than just an accounting firm who prepared our taxes...we needed advice.
We have found Harding, Shymanski and Company to be extremely proactive and there to give us advice, even in advance. They are more than just an accounting firm...they are our Trusted Advisor.
Diane Fischer, President, L&D Mail Masters
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Disclaimer: The information contained in this email is for general guidance on matters of interest only. The publication does not, and is not intended to provide legal, tax or accounting advice.
Internal Revenue Service rules require us to inform you that this communication may be deemed a solicitation to provide tax services. This communication is being sent to individuals who have subscribed to receive it or who we believe would have an interest in the topics discussed.
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Harding, Shymanski & Company, P.S.C.
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