You make small-batch IPA and bourbon, not federal excise schedules. We claim the reduced excise rate, expense the fermenters in year one, defend your COGS per SKU, and clean up your distribution-state filings.
The Craft Beverage Modernization Act made the reduced federal excise rate permanent in 2020. You still need a TTB-compliant production log, COGS allocated by SKU, and clean multi-state distribution filings. Most craft producers nail the brew and lose money on paperwork.
Beer: $3.50 per barrel on the first 60,000 barrels (down from $7) for brewers producing under 2 million barrels. Spirits: $2.70 per proof gallon on the first 100,000 proof gallons (down from $13.50) for distilleries. Permanent under the Craft Beverage Modernization Act. We make sure your TTB filings claim the right rate.
IRC §5051(a)(2); §5001(c)(1); Pub. L. 116-260 (CBMA permanent)Fermenters, brite tanks, mash tuns, stills, bottling lines, canning lines, kegs, walk-in coolers, and tap systems all qualify for §179 up to $1,160,000 for 2024. Overflow gets 60% bonus depreciation. A $300K equipment year can be 90%+ expensed immediately.
IRC §179(b); §168(k); Rev. Proc. 2023-34The IRS will not accept a single COGS bucket on a multi-SKU brewery. We set up SKU-level cost layers (grain, hops, yeast, packaging, utilities, direct labor) so flagship IPA, seasonal sour, and barrel-aged stout each get their proper cost. Margin analysis falls out as a bonus.
IRC §471; Treas. Reg. §1.471-3(c); UNICAP §263AOnce you self-distribute or ship through wholesalers in another state, you create nexus. Most states want a non-resident income tax return AND a separate alcohol beverage franchise report. We map your distribution footprint to filing obligations so a wholesaler audit does not bring federal scrutiny.
P.L. 86-272 (does not protect alcohol); state ABC statutesTap-room sales are direct-to-consumer income. Barrel-aged inventory (bourbon aging 4 years) sits as work-in-process for years and creates UNICAP capitalization issues if you produce over $26M average gross receipts. We elect §471(c) small business exception where it makes sense.
IRC §263A(i) small biz exception; §471(c); TCJA §13102New recipe development, fermentation experiments, hop trials, and process improvements often qualify for the §41 research credit. Most craft producers do not realize their pilot batches count. We document the four-part test and claim it on Form 6765.
IRC §41(d) four-part test; Treas. Reg. §1.41-4(a)Micro-brewery, S-Corp, $400K revenue 2024, 1,800 barrels produced, distributed in 3 states, taproom in home state. We claimed the §5051 reduced rate (worth ~$6,300 alone), §179-expensed a new $180K canning line, allocated COGS across 8 SKUs, and filed the §41 R&D credit for a new hazy IPA recipe.
$28,000 savedFederal savings from reduced excise + §179 + R&D credit. Cleaned up GA + AL distribution exposure so the wholesaler audit was a non-event.