Manufacturing Advisory / Industry hub
Tax Planning for Manufacturing Companies
Tax planning for manufacturers means managing the tax exposures that come with running production: cost of goods sold and inventory positions, equipment and facility investments, state sales and use tax, and credits such as the research and development credit. Pagac works with manufacturing owners to make tax decisions in advance, based on the company's facts and current tax law.
What tax issues are unique to manufacturers?
Inventory and cost of goods sold mechanics, including the uniform capitalization rules under IRC Section 263A that require certain production costs to be capitalized into inventory rather than expensed. Getting these right affects both current deductions and the accuracy of inventory on the balance sheet.
Manufacturers that ship to multiple states also face sales and use tax obligations and filing requirements where they have nexus, which need review as markets expand.
Where do equipment and facilities fit in?
Equipment purchases, leases, building acquisitions and renovations each carry depreciation and deduction rules that change with tax law, including bonus depreciation and Section 179 provisions that are frequently adjusted by Congress. Cost segregation can accelerate depreciation on qualifying facility components.
The tax result of a capital decision is usually worth modeling before the purchase, not after.
How do credits and incentives apply?
The federal research and development credit can apply to qualifying manufacturing activity that meets the statutory test, depending on the facts and documentation. State incentives and credits may add value for Michigan manufacturers. Eligibility is never assumed; it is analyzed against current law.
Pagac does not promise credits or savings, only a disciplined evaluation of what the law provides.
Manufacturing tax planning is a year-round process: inventory mechanics, capital decisions and credits are reviewed before decisions are made.
Manufacturing advisory
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From the Bloomfield Hills office of Pagac & Company, we serve manufacturing owners in Metro Detroit, across Michigan and across the country, in person and remotely.