[vc_row bg_image=”15695″ top_padding=”300″ bottom_padding=”110″ bg_position=”center center”][vc_column width=”1/1″][minti_headline font=”font-special” size=”fontsize-xxxl” color=”#ffffff” weight=”fontweight-700″ lineheight=”lh-12″ class=”lowercase”]Top Opportunities for Construction Companies to Pursue Following Federal Tax Reform[/minti_headline][/vc_column][/vc_row][vc_row type=”full_width_section” bg_position=”left top”][vc_column width=”1/1″][minti_spacer][/vc_column][/vc_row][vc_row top_padding=”0″ bottom_padding=”50″][vc_column width=”1/4″][/vc_column][vc_column width=”3/4″][vc_column_text]

PHILLIP ROSS, CPA, CGMA, PARTNER & CONSTRUCTION INDUSTRY GROUP LEADER – ANCHIN, BLOCK & ANCHIN LLP

[/vc_column_text][/vc_column][/vc_row][vc_row top_padding=”0″ bottom_padding=”50″][vc_column width=”1/4″][vc_column_text][/vc_column_text][/vc_column][vc_column width=”3/4″][vc_column_text]While the Tax Cuts and Jobs Act of 2017 (TCJA) will have a significant impact on all businesses, construction companies in particular are in a strong position to potentially benefit from the recently passed federal reforms. Companies within this highly competitive industry need to be proactive and strategically plan for their future to address project cycles, cash flow, financing, bonding and operational issues unique to each company.

There are tremendous tax planning opportunities as a result of TCJA for construction companies and their owners who have not filed 2017 returns, as well as major considerations that will impact how their tax picture unfolds for 2018.

Some of the top opportunities for construction companies to consider include:

Along with these opportunities, the federal government is expected to provide additional clarification on several aspects of the tax law that could impact construction companies beyond the initial analysis.

For example, qualified business income does not include compensation paid to an owner for services rendered to the business, or any guaranteed payments to a partner or LLC member. Those compensation levels may be reassessed to maximize the qualified business deduction for profitable pass-through entities.

Furthermore, as part of TCJA, significant limitations have been applied to meals and entertainment deductions. Under prior law, businesses could deduct 50% of expenses paid or incurred for meals and entertainment directly related to the active conduct of the business.

Under TCJA, no deduction is allowed for entertainment, amusement, or recreation; membership dues for a club organized for business, pleasure, recreation, or other social purposes; or a facility used in connection with any of the above. Only the deduction for 50% of food and beverage expenses associated with operating a trade or business generally is retained.

TCJA does enlarge this deduction to include providing meals to employees through an eating facility that meets the requirements for a de minimis fringe and for the convenience of the employer, which would sunset after December 31, 2025. What does this all mean for construction companies? These changes will make entertainment significantly more expensive for companies, potentially changing their approach to these activities.

It is essential for construction companies to analyze, plan, and strategize for the impact of TCJA on their business. Whether you are trying to leverage tax saving opportunities or strategizing your approach for some of the potential challenges, planning is important. We believe decisions construction companies make now for their 2017 and 2018 tax returns will have tremendous impact on their firms moving forward.

About the Author

Phillip Ross, CPA, CGMA, is an accounting and audit partner at Anchin, Block & Anchin LLP, the largest single-office public accounting firm in North America. He serves as leader of the firm’s Architecture, Engineering and Construction Industry Group. To contact Phil, please click here or call 212-840-3456. For more information on Anchin, please visit our website, www.anchin.com.[/vc_column_text][/vc_column][/vc_row][vc_row type=”full_width_section” bg_position=”left top”][vc_column width=”1/1″][minti_divider margin=”0″][/vc_column][/vc_row]

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