Pub. 5 2016-2017 Issue 3

Issue 1. 2017 13 Bolster the financial standing of your dealership or client by having the CFO or controller join others from dealerships nationwide. They’ll share best practices, learn about vital accounting and tax issues, and more while earning CPE credit along the way. REGISTER SOON: June 27–28 | Vdara Las Vegas www.regonline.com/2017DSGWorkshop Fuel for Growth WWW.MOSSADAMS.COM/AUTOMOT I VE Certified Public Accountants | Business Consultants 2017 WORKSHOP FOR CFOS AND CONTROLLERS deduction, whichmay result in changes to how a dealership is capitalized, and thus how interest is reported and deducted. This is a critical area that will be monitored closely by tax professionals. NADA and a coalition of CPA firms are working hard to preserve the interest deduction and other provisions in the current tax law that dealerships will need to stay profitable. Another business tax provision in the Blueprint is the immediate deduct- ibility of fixed asset purchases. This may mean that when you construct a new dealership building, you could write off 100 percent of it in year one. At first glance this may seem attractive, but taking too much of a deduction means you will not be saving tax at your highest rate. Instead you may be saving part of your tax at the proposed 25 percent and 12 percent tax brackets. Fortunately, you may be able to choose to deduct or depreciate those capital improvements. So howmuch can you decide to deduct, and how much can you postpone? We don’t yet know how flexible these changes will be, but being proactive in your planning now can mean significant tax savings later. Other Blueprint changes that could affect your individual and business taxes include: • Elimination of corporate and individual alternative minimum tax • 50 percent exclusion of capital gain and dividends, but taxed at ordinary rates • The Blueprint does not terminate LIFO at this point • Changes to the estate tax froma tax on value to a tax on capital gains • Elimination of net operating loss carrybacks to a carryforward only, with no expiration date Many of the proposed changes will not only affect the taxation of your business and you individually, but also the manufacturer and your customers. For example, the Blueprint includes what is referred to as a “border adjustability tax,”which increases the cost of manufactured goods if the manufacturer imports more value in goods than they export. The calculation is complex and based on several factors, but this type of tax could dramatically impact the automotive industry with its large volume of cross-border transactions. Currently, legislation is being drafted based on the Blueprint. NADA’s sources have indicated that the first presentation of the proposed law to Congress will be in late March or April of 2017. As the legislation moves through Congress, it will be important to keep up with the changes and make sure that your organization is ready to be proactive in your planning and operations. Sid Tobiason has practiced public accounting since 1978. He advises clients on federal income tax, estate tax, entity structure, the purchase and sale of businesses, ownership transition, and successionplanning. He canbe reached at (858) 627-1448 or sid.tobiason@mossadams.com . Amy Stillwell works exclusively with dealership owners and closely held businesses on federal and state income tax and estate planning for businesses and owners. Amy also manages large dealership transac- tions including structuring the transaction and managing the purchase and sale financial process. She can be reached at (858) 627-1410 or amy.stillwell@mossadams.com.