This post covers the changes that will affect business tax returns with suggestions of a few things you can do before year end related to the new tax law.  

While most of the provisions won’t go into effect until 2018, you can take a couple of steps now to minimize your total tax bill for 2017. 

1)    Consider purchasing assets that may qualify for 100% bonus depreciation or the Section 179 expensing election.

2)    Deferring income into 2018 is especially relevant this year since many businesses and individuals are expected to have lower marginal tax rates next year under the new bill.

3)    Accelerating deductions into 2017 is especially relevant this year since many businesses and individuals are expected to have lower marginal tax rates next year under the new bill.

4)    If you think your business will have a net operating loss (NOL) for 2017 try and push as many deductions as possible into the 2017 tax year as starting in 2018, the carryback for NOLs is eliminated and the deduction for NOL carryforwards is limited to 80% of taxable income.

Below are the items in the new tax bill that will affect your business tax return. We’ve not included any of the tax law changes that would only affect larger business taxpayers.

The corporate tax rate changes to a flat 21%. If your corporate taxable income was mostly in the 15% federal tax bracket (under $50,000) this will increase your corporate income tax. If your corporate taxable income was higher than $95,000, you should have a decrease in your federal corporate tax. If your business isn’t taxed as a C Corporation, this doesn’t apply to you.

The corporate Alternative Minimum Tax (AMT) has been repealed. The individual AMT was not repealed. If your business isn’t taxed as a C Corporation, this doesn’t apply to you.

The 80% Dividends Received Deduction (DRD) has been reduced to 65% and the 70% DRD has been reduced to 50%. If your business isn’t taxed as a C Corporation, this doesn’t apply to you.

The maximum Section 179 deduction has increased to $1,000,000.

For the next five years businesses can deduct 100% of all fixed asset acquisitions (other than certain motor vehicles and most real estate). This provision applies to all assets acquired after September 27, 2017.

The threshold for businesses being allowed to use the cash basis of accounting has increased to $25,000,000.

The exception for businesses having to use the completed contract method of accounting for long term contracts has also been increased to $25,000,000.