The Tax Cut and Jobs Act (TCJA) signed into law in late 2017, made some of the most significant tax regulation changes in decades and created many new planning opportunities for contractors. Changing entity types, accounting methods, new deductions for qualified businesses, new depreciation alternatives, and new tax incentives for qualified investments are just some of the provisions in the TCJA that will require careful analysis and proactive planning for CPAs and their contractor clients.
On March 27, 2020, The Coronavirus, Aid, Relief and Economic Security Act (CARES Act) was passed, which includes many tax provisions that are intended to put cash flow in the hands of individuals and businesses. On December 27, 2020, the Consolidated Appropriations Act, of 2021 was passed, impacting specific tax regulations.
On August 16, 2022, the Inflation Reduction Act of 2022 (IRA) was passed. The IRA will have a wide-ranging impact on the construction industry, primarily around the energy and climate provisions of the legislation. These provisions were enacted to further promote, expand, and incentivize actions around the design, development, and construction of energy-efficient property.
The CICPAC Tax Thought Leadership Committee has compiled an updated summary of those changes potentially impacting construction clients for planning in 2022 and beyond.
These potential changes and considerations are related to:
- Construction accounting methods for large contractors and small contractors
- Section 199A and the benefits from it
- Other opportunities and considerations:
- Excess business loans
- Capitalization of research expenses (R&E)
- Choosing between S Corp versus C Corp
- NOL changes
- Bonus depreciation changes
- Section 179D changes
- Pass-through entity (PTE) tax elections
- Opportunity zones
To read the full whitepaper, download it here.
If you have questions about the information outlined above or need assistance with a construction tax or accounting issue, Calvetti Ferguson can help.
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