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Important Tax Reforms for Scrap Recyclers

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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