In the wake of rewritten tax code, Equipment Dealers Association and Associated Equipment Distributors are providing members with resources to help them learn about upcoming tax changes.
Kim Rominger, CEO and president of EDA, Brian McGuire, president and CEO of AED, and others are also voicing appreciation for dealers who contacted their Congressional representatives.
The EDA leaders are commend regional dealer association partners, including Rex Collins of HBK and Curt Kloeppel of Equipment Dealer Consulting, who “worked tirelessly” to target key legislators and advocate for dealers, the group says in a press release.
EDA is a trade organization representing 4,500 retail dealers in agricultural as well as construction, industrial, forestry, outdoor power, lawn and garden, and turf equipment businesses. It’s known as primarily representing agricultural equipment dealers.
“The Tax Cuts and Jobs Act is a major win for dealers across the United States,” says Collins, a partner with HBK. “EDA spearheaded the effort to obtain an amendment for floor plan financing for dealers and fought vigorously to ensure the preservation of LIFO.”
He says the hard work of EDA dealers paid off in “a big way.”
EDA is providing a webinar in January and a written overview of the changes. To view details, click here.
Meanwhile, Associated Equipment Distributors is providing information on the new law for the dealers of construction equipment here.
McGuire issued the following statement after congressional approval of the tax bill:
“Every major piece of legislation will have some positives and some negatives. The Tax Cuts and Jobs Act is no different. While AED didn’t get everything we wanted, I have no doubt that had we not been at the table throughout the process, the industry would be in a far worse position,” McGuire says.
He goes on to say that the tax reform process isn’t over and that the act will need to be refined. He points out that many important provisions are temporary.
“The administration will be issuing guidance on many aspects of the new law in the coming year,” McGuire says.
“AED will remain engaged, but it’s important that construction equipment dealers also continue to be involved. As this process has shown, there’s too much at stake not to advocate for your company and your industry.”
For an analysis of the final bill by the Tax Foundation, an independent nonprofit tax policy nonprofit, click here.
To review the final Tax Cuts and Jobs Act conference report visit this page.
Here are some of the tax topics that EDA has summarized for the 2018 tax year through 2025:
- 1031 Like-kind exchanges are maintained for real property transactions.
- Estate tax relief is granted by doubling the exemption amounts ($11 million for individuals; $22 million for couples) through 2025; reverting to current amounts thereafter.
- Corporate rate permanently reduced to 21 percent beginning in 2018.
- Pass-through businesses income establishes a 20 percent deduction of qualified business income from certain pass-through businesses. Specific service industries, such as health, law, and professional services, are excluded. However, joint filers with income below $315,000 and other filers with income below $157,500 can claim the deduction fully on income from service industries. This provision expires December 31, 2025.
- Alternative minimum tax for corporations is eliminated.
- Small business exemption fully maintained for businesses with less than $25 million in revenue. Farming businesses with income greater than $25 million can retain interest deductibility if they use the Alternate Depreciation System for investments.
- 179 Expensing limits are increased to $1 million per year with phase-out beginning at $2.5 million, indexed for inflation after 2018.
- LIFO accounting method is maintained.
- Interest deductibility:
- Small business exemption: is fully maintained for businesses with less than $25 million in revenue. Farming businesses with income greater than $25 million can retain interest deductibility if they use the Alternate Depreciation System for investments.
- Limitation on deductibility with floor plan interest amendment: deduction limited to the sum of (1) business interest income; (2) 30 percent of the taxpayer’s adjusted taxable income for the tax year; and (3) the taxpayer’s floor plan financing interest for the tax year. Disallowed business interest deduction can be carried forward.
- Definition of floor plan financing Interest
- Interest paid or accrued on indebtedness used to finance the acquisition of farm equipment held for sale or lease to retail customers and secured by the inventory so acquired. Does not include construction machinery and equipment.
- Trade-off for using floor plan interest
- Full expensing disallowed if floor plan interest factored into deduction. Sec. 179 expensing still maintained if floor plan interest used.