Webinar Recap: Year-End Tax Strategies for Manufacturing and Distribution Leaders

Citrin Cooperman’s “Year-End Tax Strategies for Manufacturing and Distribution Leaders” webinar, presented on November 5, 2025, provided an in-depth examination of the new effects of the One Big Beautiful Bill Act (OBBBA) on both federal and state tax landscapes, opportunities and challenges surrounding research and development (R&D) credits and expense deductions, and strategies for maximizing benefits under the qualified small business stock (QSBS) provisions.

A central theme was the complex interaction between federal tax reforms and state-level responses. States can either conform to federal changes immediately (rolling conformity), adopt changes as of a designated date (static conformity), or selectively decouple from new federal rules, having their own stance on incentives, deductions, and credits. Eugene Ruvere discussed that for manufacturers and distributors, this patchwork requires careful attention, as favorable federal deductions — such as new accelerated depreciation under the OBBBA — may not flow through to state returns, potentially leading to unexpected tax liabilities.

Manufacturers and distributors are cautioned that while federal law changes, like elective depreciation allowances or new research and development (R&D) incentives, may offer significant benefits, many states require add-backs or limit these deductions on state returns, sometimes resulting in unexpected tax liabilities. Companies should consider pursuing state and local incentives, especially for onshoring jobs and expanding facilities, while closely tracking each state's approach for compliance and risk mitigation.

Bob Alperin focused on research and development (R&D) expenses and credit planning. Beginning in 2025, businesses can once again fully expense domestic R&D costs; foreign R&D, however, still requires a 15-year amortization. The new provisions also permit small businesses to retrospectively apply these rules for prior years (2022–2024), creating opportunities for sizable immediate deductions and refunds, either by amending returns or changing accounting methods. It is vital to model different approaches to determine whether to accelerate or defer deductions. Additionally, the flexibility to convert unused R&D credits to payroll tax credits for small businesses was highlighted as a key liquidity benefit.

Lucy Lee explored the enhanced Qualified Small Business Stock (QSBS) exclusion, used to incentivize investment in U.S. businesses. OBBBA raised the asset threshold for QSBS to $75 million and increased the potential gain exclusion from $10 million to $15 million, with partial benefits now available after holding periods as short as three years. Strategies such as converting LLCs to C corporations to access QSBS benefits, handling state nonconformity, leveraging family trusts, and gifting for enhanced tax outcomes were discussed.

The session concluded with practical guidance on residency changes for optimized state treatment, accessing state and local credits for new warehouse expansions, and international considerations for cross-border investors under the new rules. Year-end planning for 2026 presents valuable opportunities — but also new complexities. Industry leaders can maximize benefits from new bonus depreciation, R&D expensing, and sector-specific credits, provided they take an integrated approach to federal, state, and global tax strategies. Staying agile and consultative will help manufacturers and distributors enhance profitability, fuel innovation, and build resilience in a rapidly evolving market.