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Manufacturing Edge

A Year-End Planning Checklist for Every Manufacturing Company and Distributor

As we approach the end of 2011, here is a list of items to consider as part of your tax year-end planning. Inventory Write-off (don’t assume all the reserves are non-deductible)It is time to consider looking at those inventory reserve accounts...

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Goodwill Impairment Testing — Simplification May Be Possible

Many organizations have goodwill on their balance sheets that is not being amortized for financial reporting purposes. Many years ago, accounting standards changed and organizations stopped amortizing goodwill (though it is still amortized for income tax purposes over a 15-year...

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Ten Easy Ways To Improve Your Website and Bring In More Customers

The Internet is a powerful marketing tool that very few businesses harness effectively. Marketing online goes far beyond designing a visually appealing website. The more effort and time you put into your site, making it easy to use, more “visible”...

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Inventory Management for Companies Using LIFO IPIC Valuation Methodology

As management is looking for avenues to reduce costs, optimizing the use of available working capital and cash flows from operations, efficient inventory management could be a very useful tool. For companies using last in, first out (LIFO) inventory price index...

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Hedging Commodities to Manage Business Risks

The most fundamental principle of finance measures the amount of risk you have related to each dollar of potential profitability. Yet, companies have a tendency to focus more attention on absolute returns, rather than on what they are risking to...

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Rising Healthcare Costs: Can We Stop the Insanity?

Was Ben Franklin America’s first healthcare expert? Looking back, Franklin understood how to stop the rising costs of care and what to do with the savings. As a common sense strategy to stop rising healthcare costs, an ounce of prevention is worth more than a pound of cure. Franklin also knew that a penny saved was a penny earned. By applying his wisdom today, business owners can provide quality healthcare and stop the insanity of rising healthcare costs.

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Deducting 100% of the Cost of Certain Vehicle Purchases

Businesses can once again deduct up to 100% of the purchase price of new sports utility vehicles (SUV). The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, enacted December 17, 2010, allows bonus depreciation of 100% on...

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Expanding Lean Thinking

Since the mid-1980s, many companies, with great success, have adopted the lean manufacturing system that was developed by the Toyota Motor Corp.  By making fundamental changes to the way things are done on the shop floor, production has greatly improved....

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The Problem with Multi-Employer Pension Plans

For unionized employers that are signatory to area-wide or industry-wide collective bargaining agreements, the multi-employer defined benefit pension plan for many years has provided employees who are covered by these agreements with a definite level of pension benefits on retirement...

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Fund Growth with Operational Best Practices

We all know that growth in an organization requires capital. This is true for a variety of reasons and the complexities vary from company to company. Frequently, capital is required as an organization grows because more trade receivables and inventories...

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Significant Tax Savings for Fixed-Asset Investments in 2011

Late in 2010, Congress extended two key tax-depreciation provisions — Section 179 and Bonus Depreciation. These provisions should be kept in mind with your capital-expenditure planning for this year and future years as they could save you significant tax dollars...

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Foreign Entities Doing Business in the U.S. — Tax Structures and Pitfalls

中文版 Once a foreign-based company decides to enter the U.S. market, its first major decision is to determine which type of U.S. entity (branch, single member LLC [SMLLC], partnership, or corporation) will best serve its long-term financial and tax interests....

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Congress Repeals 1099 Reporting Requirements Contained in the Health Care Bill

On April 5, the United States Senate passed H.R. 4, repealing the 1099 reporting requirements contained in the Patient Protection and Affordable Care Act (PPACA) that otherwise would have taken effect in 2012. H.R. 4 also repeals the 1099 reporting...

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Second Chance for Voluntary Disclosure

The IRS announced its second voluntary disclosure program for taxpayers to disclose unreported foreign accounts, including income and expenses related to the accounts. By participating in this program, taxpayers with unreported foreign accounts can avoid criminal prosecution for unpaid taxes....

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Domestic Production Deduction Increases by 50% in 2010

In 2010, the domestic production deduction (DPD) will reach the highest percentage allowed per the American Jobs Creation Act of 2004, increasing from 6% to 9%. If a taxpayer falls within the 35% federal tax bracket, he or she can...

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Assembling Your Due Diligence Team

Mike’s Molding manufactured parts for the appliance industry. He saw an opportunity to add customers and product offerings by acquiring Irwin’s Insert Molding, an insert molder from whom Mike had bought electrical connectors for several years. Irwin told Mike he...

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Illinois Manufacturer’s Purchase Credit

Attention Illinois manufacturers! The state wants to double your benefits! It sounds too good to be true, but the Manufacturer’s Purchase Credit (MPC) is real. The MPC is available to Illinois manufacturers and graphic-arts producers. The credit is earned by purchasing...

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The 2011 Illinois Tax Hike and Other Changes — Just the Facts

Early in the morning of Wednesday, January 12, 2011, amendment #3 of Senate Bill #2505 was sent to Governor Quinn for signature. The bill, which the governor is anticipated to sign, is estimated to generate $6.8 billion of additional revenue....

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Tax Cuts and Unemployment Benefits Extended

The House of Representatives passed the Senate version of the tax bill late on December 16, 2010, without amendment, by a vote of 277-148. The "Unemployment Insurance Reauthorization and Job Creation Act of 2010", HR 4853, postpones the sunset of...

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Research & Development Credit: To Be, or Not to Be?

Think you need employees in white lab coats to qualify for the research and development tax credit? No! The R&D tax credit is for taxpayers that design, develop, or improve products, processes, techniques, formulas, or software. The R&D credit is...

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Lease Accounting Changes are Coming

The way we go about accounting for leases will never be the same. On August 17, 2010, the Financial Accounting Standards Board (FASB) published for public comment a proposal that is expected to make significant changes to the financial reporting...

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The Michigan Business Tax: The Basics

The Michigan Business Tax (MBT) was enacted on January 1, 2008 and replaced the Single Business Tax. The MBT comprises two separate taxes: a business income tax and a modified gross receipts tax. Taxpayers are subject to the MBT once...

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Organizing the Journey of Continuous Improvement

Part Two in a Series on Continuous Improvement. Read Part One.Driven by the need to reduce costs, eliminate waste, and improve productivity, the manufacturing industry is focused on improving processes. These manufacturing improvement projects have been used in manufacturing operations, quality,...

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Lean, Six Sigma and ERP - Working Together

Part One in a Series on Continuous Improvement. Read Part Two.The manufacturing industry is focused on improving business processes, eliminating waste, and reducing costs. Management teams have focused on three different tools to support their efforts: Lean, Six Sigma, and...

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How Much Is Your Business Worth?

You wouldn’t buy a stock if you could not regularly check its value, but do you know the value of your largest investment — your business? You might think “my friend’s business sold for X times EBITDA (earnings before interest,...

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Capital Spending: Treat It Like An Investment, Because It Is

For almost two years now, middle-market business owners and management teams have been challenged by the global economic crisis to make the tough decisions necessary to ensure that they survive, and ultimately thrive, in uncertain economic times. Cash-flow management has...

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Be Irish — Going Green has tax benefits!

As previously discussed in the June 2008 Tax Highlights, “Save $$ by Going Green with Your Building”, Section 179D, originally enacted as part of the Energy Policy Act of 2005, provides a deduction for energy-efficient commercial buildings through December 31,...

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Tax Benefits from the HIRE Act

In March, President Obama signed into law the Hiring Incentives to Restore Employment (HIRE) Act, which provides a number of tax benefits. The benefits include a payroll tax holiday for hiring new workers who were previously out of work, a...

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Manufacturers & Sales Tax - What You Need to Know

Compliance with sales tax is a relatively simple process. When making a sale, the seller must collect and remit sales tax at the rate applicable to the customer’s location. However, sales made to a customer who is not the end...

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Excess Capacity - Tax Advantage or Disadvantage?

In the December 2009 Manufacturing Edge, Brian Wiedenhoeft wrote the article “Excess Capacity: Accounting, Pricing and Production Issues,” which discussed the accounting implications of allocating overhead when production is below normal.  A capacity-based fixed overhead allocation allows, for book purposes,...

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Review Your Capital Assets for Possible Impairments

As we put the recent recession in our rearview mirror and look ahead to the anticipated greener pastures of 2010 and beyond, it may be appropriate to review your company’s capital assets (land, buildings, machinery, and equipment) for potential impairments.U.S....

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Ensuring Timely and Accurate Financial Reporting for Your Foreign Subsidiaries

Make sure you have all the components in place for accurate, and timely, financial reporting from your foreign subsidiary.Recently we were asked to help a company set up the financial reporting infrastructure for a foreign subsidiary it had recently acquired....

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Issues Surrounding the Treatment of Business Combinations

In December of 2007, the Financial Accounting Standards Board (FASB) issued Statement No. 141(R), Business Combinations. This standard is now referred to as ASC 805 given the recently introduced FASB Codification. These rules have generated a significant level of discussion...

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Are We Coming Out of a Recession? Is it Time to Take the M&A Plunge?

The U.S. stock market is soaring, commodity prices are on the rise, and there are signs that consumer confidence is growing. The positive news is countered with growing bank failures, indications that banks are still not lending, persistent unemployment, and...

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LIFO and Decreasing Prices—The Perfect Storm?

Many manufacturers and distributors will default to utilizing the first-in, first-out (FIFO) method in valuing inventory. When raw material and product prices are increasing, older inventory items are replaced with new, higher priced inventory as products are sold. This method...

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Excess Capacity: Accounting, Pricing and Production Issues

The severe economic conditions experienced by multiple industries during the recent worldwide recession have several accounting, pricing and production implications. In many instances, companies have been forced to dramatically change their cost structure by reducing the size of their workforce,...

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Inventories - Lower of Cost or Market Considerations

Accounting for the cost of inventory is one of the most complex financial and management accounting challenges that manufacturers face. That said, accounting policies, which are required to be disclosed in financial statements, often sound similar. In most cases, an...

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Decrease Taxable Income at Year-End with Needed Upgrades

In February 2009, Congress passed The American Recovery and Reinvestment Act. This stimulus act provides many opportunities for taxpayers to save money, but most importantly, for businesses, the Act extends bonus depreciation from 2008 to 2009. By taking advantage of...

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Potential Payday for Propane Users

A refundable tax credit for the sale or use of alternative fuels and alternative fuel mixtures is available to provide relief for taxpayers from the fuel tax. The revenue collected from the fuel tax is committed to transportation and road...

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Take Advantage of Year-End LIFO Planning Opportunities

Even if you ruled out the LIFO (last-in, first-out) inventory method as a tax strategy in the past, now might be the time to give it another look. Until five years ago, many manufacturers' reasons for ruling out LIFO were...

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R&D Credit Offers Manufacturers Money-Saving Opportunities

When many business owners hear about research and development (R&D), they often think of scientists in lab coats creating new chemicals. So it's no surprise that these business owners might believe the income tax credit for research expenditures does not...

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Sales Tax Exemption Certificates: Get ’Em While They’re Hot

Sales taxes are tricky. Collect and remit tax from everywhere you sell and there's no cost to your business—or at least no direct, out-of-pocket cost. The customer pays the tax.The indirect cost of the time to administer the sales and...

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Know the Tax Implications of Financial Accounting Decisions

Accounting for the cost of inventory is one of the most complex financial and management accounting challenges that manufacturers face. Choosing from a wide range of costing methods, accurately entering inventory transactions into information systems and ensuring that management gets...

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Estate Planning Secret: How to Use Lack of Marketability

Owners of closely held companies often work diligently for 25 years or more to build the value of their business. But as these owners near retirement, all of their hard work—and the resulting increase in the value of their business—creates...

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What Should Midsize U.S. Manufacturers Know About Doing Business in China?

Is your company considering conducting business offshore? Consider the experience of one Blackman Kallick client, a mid-size manufacturer that has been sourcing product in China for more than 20 years. "Our company started doing business overseas primarily because of competition,"...

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Are You Properly Allocating Costs to Inventory?

Many people are confused over the extent to which overhead costs can be allocated to inventory. Current accounting standards allow for the allocation of variable production overhead to inventory based on actual use and fixed overhead based on the normal...

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Is Your Inventory Subject to Fraud Risk?

Inventory is highly susceptible to fraud in the form of misstated financial reporting and misappropriation of assets. Either type of fraud is detrimental to your company.How does inventory fraud occur?Including nonexistent inventory items in the physical count (e.g., empty boxes)Improperly...

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This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.