Written by James D. Schulz, CPA, CVA, MT, Partner
One of HBE Becker Meyer Love LLP’s core industry groups is our manufacturing niche group. The group focuses on various tax and accounting issues specifically related to the industry. There are many great opportunities for tax savings for companies in this industry.
Our manufacturing team provides comprehensive business and financial services. We help clients master and move beyond the fundamentals to seek new and better ways of doing business through cost recovery studies to optimize depreciation deduction, international and multi-state tax planning, sales/use/property/excise tax analysis, transition and succession planning, valuations and more. Our professionals provide strategies and solutions that are customized for each business. They also work with you through implementation of these strategies.
A few tax incentives that manufacturers should consider include:
- Nebraska tax incentives: LB 312 (formerly LB 775) provides significant incentives in the form of refundable sales and use tax, income tax and withholding to employers who expand their workforce and invest in property in the state. Companies may consider applying for credits if they anticipate at least $1 million in new investment and 10 new full-time equivalent employees.
- Research and development credits: A Federal and Nebraska tax credit is available to businesses which invest in qualified research expenditures which are undertaken to discover information that is technological in nature, contain elements of a process of experimentation relating to a new or improved function, performance, reliability, or quality.
- IC-DISC: A Domestic International Sales Corporation allows ordinary deductions, in the form of commissions based on foreign sales, to the manufacturing company and reduced rate qualified dividends to be remitted to shareholders. The tax savings associated with higher corporate rates and lower qualified dividend rates can make this a very good tax saving good strategy for manufacturers with foreign sales.
- Cost segregation: The benefits of a cost segregation study allow for faster depreciation deductions for building costs. By performing a cost segregation study, it allows portions of a building, normally depreciated over 39 years, to be segregated to lesser depreciable lives. This is especially lucrative for manufacturing related buildings as any special wiring or construction related to manufacturing equipment that is included in the building cost can be segregated and depreciated much faster.
HBE would like to help you and your business succeed. If you would like more information on any of these tax savings strategies or would like to discuss how the manufacturing team could assist, please contact one of the members of the HBE manufacturing team at (402) 423-4343.