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New tax options for produce companies

Headshot of C. James Carr, President & CEO of Produce Blue Book.

Need I say it is tax season?

Along with tax computations comes the general gnashing of teeth; however, there may be good news for some tax filers, given the tax law changes enacted last year.

Among the most important changes, particularly for small and mid-sized businesses are:

  •  Pass-through deduction changes
  •  Flat rate for C corporations
  •  Increased availability of the cash method of accounting for tax purposes
  •  Simplified accounting for inventory
  •  Increased 179 expense deductions
  •  100% bonus depreciation

Pass-through businesses–those that are taxed only once, such as Sub-S’ and LLC’s–will effectively have their tax rate lowered to 29.6% (assuming they are in the top bracket, 37%).  This is the result of being able to deduct up to 20% of qualified business income.  Not all pass-through entities will qualify.

For C corps the permanent tax rate has been lowered to 21%, from 35%.  Keep in mind that C corps pay double taxation—once on the net income and a second time on dividends paid to shareholders or when the business is sold (typically an asset sale).

For wholesalers and distributors, the most advantageous tax changes may be:  utilizing the cash method of accounting for tax purposes in an expanded fashion and accounting for inventory in a more simplistic manner.

While the new tax laws talk about the permanency of the enacted changes, there is already talk about changing the laws.  Is the ink dry yet on what was passed?  Gotta love politicians.

Good luck preparing your taxes.


Jim Carr is the President and CEO of Blue Book Services Inc.