Following the enactment of the comprehensive tax reform legislation, the scrap recycling industry came out pretty well
with a doubled expensing provision; retaining Interest Charge-Domestic International Sales Corporation (IC-DISC); elimination of the businesses Alternative Means Test (AMT); and a lowering of both the corporate and pass-through tax rates. These changes will enable scrap processors to deploy new and improved sorting and separation technologies, new safety devices, and more energy-efficient equipment. Below is a listing of the major changes to the tax system as a result of the comprehensive tax reforms:
- Lowers corporate tax rate permanently to 21 percent in 2018
- Establishes a 20 percent deduction for pass-through businesses
- Provides full and immediate expensing of capital investments for five years
- Increases section 179 expensing cap from $500,000 to $1 million
- Enacts repatriation of foreign-source income at 15.5 percent and 8 percent (illiquid)
- Limits net-interest expensing to 30 percent of earnings before four years
- Earnings before interest and taxes (EBIT), earnings before interest taxes and amortization (EBITA)
- Abolishes corporate alternative minimum tax
- Retains IC-DISC
- Eliminates domestic production tax credit (Section 199) after 2018
- Moves to territorial system with base erosion rules
Section 179
- Increases expensing from 50 to 100 percent
- Increases expensing cap from $500,000 to $1 million
- Increases bonus depreciation from 50 to 100 percent
- Increases total annual spending cap to $2.5 million
- Expands list of qualified property (beyond the RISE Act)
- Applies to new, used, or leased equipment
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