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Anchin ranked as a Top 50 Construction Accounting Firm by Construction Executive
Anchin has been ranked as a Top 50 Construction Accounting Firm by Construction Executive Magazine recognizing the quality of Anchin’s Construction Industry Group.
PHIL ROSS SHARES TOP OPPORTUNITIES FOR CONSTRUCTION COMPANIES TO PURSUE FOLLOWING FEDERAL TAX REFORM
While the Tax Cuts and Jobs Act of 2017 (TCJA) has had a significant impact on all businesses, construction companies in particular are in a strong position to potentially benefit from the changes. Companies within this highly competitive industry need to be proactive and strategically plan for their future to address project cycles, cash flow, financing, bonding and operational issues unique to each company.
Some of the top opportunities for construction companies to consider include:
- Beginning in 2018, the average annual gross receipts exception to the requirement to use the percentage-of-completion accounting method for long-term contracts has increased from $10 million to $25 million for contracts entered into beginning in 2018. Businesses that meet such an exception would be permitted to use the completed-contract method (or any other permissible method).
- Under prior law, net taxable income from construction pass-through business entities (such as sole proprietorships, partnerships, S corporations and LLCs) was passed through to owners with a 9% deduction based on their activities. It was then taxed at the owner’s tax rates. For tax years beginning in 2018, construction company owners could be eligible for a new 20% deduction, based on their qualified business income (QBI). QBI does not include compensation paid to an owner for services rendered to the business, or any guaranteed payments to a partner or LLC member. Those compensation levels may be reassessed to maximize the QBI deduction for profitable pass-through entities.
- Construction companies can have difficulty managing and strategizing cash flows. Under prior law, taxpayers had several requirements and limitations related to the use of the cash method of accounting. Many of these limitations have been loosened or removed for companies with less than $25 million in average annual gross receipts under TCJA, resulting in a major potential.