- Client Login
Office Closure: Beginning July 2, the Delap office will close for an interior remodel. The remodel project has been in the works for months and will include an updated reception area as well as new and improved conference rooms. The project is scheduled to last a few months, with the office anticipated to reopen sometime around the holidays. We will continue to assist our clients with their accounting and advisory needs during the remodel, and we appreciate your patience and understanding during this renovation process.
The Tax Cuts and Jobs Act of 2017 (TCJA) was beneficial to taxpayers in many ways. One would hope so considering the name of the Act. However, there were a few aspects of the TCJA that were unfavorable from the taxpayer's standpoint. Here we will look at just one of those unfavorable provisions in relation to auto dealerships and discuss how to help mitigate the effects.
For most larger businesses, the new tax rules put a limit on the deductibility of business interest expense. Thankfully, the TCJA has an exception for auto dealers, recognizing that floor plan financing is common practice and that the interest on these loans is a substantial expense. This exception for auto dealers didn't come without a price tag.
Important note: The Business interest expense limitation only applies to businesses with average annual gross receipts of more than $25 million for the prior three tax years (calculated in the aggregate for entities in a commonly controlled group). Therefore, auto dealerships below this amount are allowed to take bonus depreciation.
Despite bonus depreciation being disallowed for auto dealers with gross receipts of more than $25 million, there are alternatives to bonus depreciation which allow an immediate deduction for capital expenditures.
There are other nuances to these rules not covered in detail above, and there are numerous other changes under the new tax laws that could affect your business and personal returns. If you have questions for Delap, please do not hesitate to give us a call at (503) 697-4118 or contact us via email.