U.S. News Quotes Elizabeth Stevens on How Changes to BEAT Could Impact Cost of Goods Sold
At a recent Washington conference, panelists from the law firm of Caplin & Drysdale, audit and consulting giant PricewaterhouseCoopers and the IRS talked about the new law's Base Erosion and Anti-Abuse Tax (BEAT) and how it interacts with a standard business accounting entry called cost of goods sold (COGS) that encompasses the expenses of producing goods.
Cost of goods sold normally covers raw material and labor expenses, but also other, less clear-cut expenses. Importantly for tax planners, COGS is exempt from BEAT, under the new tax law. So putting more expenses into COGS could reduce BEAT exposure.
"There are a lot of different opportunities for restructuring or changing who does what to improve your posture" on cost of goods sold for BEAT purposes, said Elizabeth Stevens, an associate at Caplin & Drysdale on the panel. "I'm sure the IRS will be auditing BEAT computations."
IRS officials on the panel focused their remarks on the rules for cost of goods sold and legal precedents governing it.
For the full article, please visit U.S. News & World Report’s website.
Excerpt taken from the article “Tax-Dodge Strategists Probe Loopholes in New U.S. Law, IRS Wary” by Kevin Drawbaugh and David Morgan for Reuters.