Tax PlanningYear-end Tax Strategies

Adjusting to the Tax Cuts and Jobs Act for 2019

We are a little past the half-way point of 2019, and now would be a good time to review the impact that the Tax Cuts and Jobs Act (2017) and how it will continue impact your brewery this year.  Our mission is to help you, and; craft breweries, by providing pro-active planning for these important decisions at affordable fixed rates.  Our packages include unlimited consultation and advice so you can use us as your sounding board and get help with these important decisions. We also offer mid-year goals and tax planning sessions and we’ll proactively come to you with tax reduction strategies throughout the year.

As a thought starter, we came across an article in Craft Brewing Business on how the Tax Cuts and Jobs Act (2017) will continue to impact your business.

“One of the most significant changes facing craft breweries under the TCJA, now in its second year, is the tax status of the corporation. Those who last year opted to remain in their S Corporation status and not convert to a C Corporation now have the opportunity to take a closer look at the advantages and disadvantages of conversion.”

“In brief, changing corporation status from an S Corporation or partnership (pass-through) to a C Corporation translates into profits being taxed separately from the company’s owners. Since many craft breweries have organized themselves as pass-through entities, the new structure under the TCJA, which drops the top tax rate for C Corporations from 35 percent down to 21 percent, could be a major incentive. No limitation on state tax deductions is another potential advantage to C Corporation status. In contrast, the cap on personal state tax deductions for owners of pass-through entities is $10,000.”

“On the down-side, C Corporation owners are subject to double taxation if they are paying wages or disbursing dividend contributions to themselves. For brewery owners looking to sell their business over the next few years, it might make more sense to remain as a S Corporation since pass-throughs, in most cases, do not pay corporate tax and would avoid double taxation upon a sale event.”

“Change is never easy, especially when it comes to new and convoluted tax regulations. With just a single year of the TCJA now in the books, it will take some time to become acquainted with all the pros and cons of this brave new tax world.”  So, now is a good time to schedule a consultation with us so that we can review what would be the best strategy for you and your brewery for the remainder of the year and the upcoming tax filing season.

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Article Excerpted from Craft Brewing Business, written By Stephen Fuller and Corey Veneziano , July 24, 2019.

Photo Credit: Shutterstock