As a value-added service to our accounting firm partners, SourceCorp provides a Monthly LIFO PPI Report. This exclusive report helps CPA firms see where the tax reduction opportunities are for existing and prospective clients.
To defer federal income tax based upon inventory inflation, CPA firms can use the Last-In-First-Out (LIFO) inventory method especially for manufacturing, wholesale/distributor, and retailer clients.
Client Industry Opportunities
Click here to review the March PPI “mined” for inflation, grouped by industry with specific categories at the 4-digit PPI level (NOTE: the PPI categories are published by the Bureau of Labor Statistics and start at a 2-digit industry level and continue down to an 8-digit very specific product category). The most obvious opportunities are in the following industries:
* Chemicals and allied products (paint, pharmaceuticals, plastic resins)
* Rubber and plastic products
* Building materials
* Metal and metal products
* Nonmetallic mineral products (concrete, asphalt)
* Some categories of furniture
* Machinery and equipment
* Transportation equipment
* Fuels and related products
* Various miscellaneous products
For more information, please visit SourceCorp at: SourceCorpTax.com
The Economic Stimulus Act signed by President Bush on February 13, 2008 helps businesses in two ways. It gives companies a 50% bonus deduction on most shorter life property placed in service in 2008. And it increases — to $250,000 from $128,000 in 2008 — the section 179 limit on expenses that small businesses can deduct from annual income, with a total cap of $800,000.
Bonus depreciation allows taxpayers to take a deduction of 50% of all property placed in service with a class life of 20-years or less. The remaining basis for the shorter life property gets depreciated over the applicable MACRS recovery period. For every $1 million of 5-year property, the deduction will be approximately $600,000 in the first year. Read More →
IRS reverses course on dealership LIFO pooling after three decades Revenue Procedure 2008-23 – Vehicle Pool Method
Vehicle Pool Benefits & Opportunities
Confusion over which LIFO pool SUVs, mini-vans, and crossovers should be included in is finally over. With the release of Rev. Proc. 2008-23, auto dealerships may now group all light-duty vehicles (cars, trucks and crossovers) in one LIFO pool.
This new pooling method should help prevent dealerships from liquidating LIFO layers if the recent shift to selling more crossover vehicles and trucks reverses itself and dealerships return to selling more cars. Read More →
SourceCorp has provided our cost segregation services to over a thousand clients ranging from privately held businesses to Fortune 500 companies, across the U.S and in industry segments ranging from automotive and retail to manufacturing and real estate management companies. Our solution addresses each of the specific requirements outlined below.
Cost Segregation Tax Services:
Our engineering-based cost segregation studies provide more precisely segregated property information, giving our clients the information and detailed supporting documentation they need to meet with strict IRS regulations and requirements for audit defense.
Through our engineering-based cost segregation study a wide range of building components, such as electrical installations, plumbing, mechanical components, and finishes will be identified and as applicable, reclassified into shorter-lived asset classes. This adds up to substantial savings to you. Read More →
The Research & Development (R&D) tax credit is one of the most significant domestic tax credits remaining under current tax law – a substantial tool for maximizing a company’s value.
Because the R&D Tax Credit is a resource-intensive and highly specialized process, we have discovered that many companies simply cannot develop and substantiate the necessary R&D documentation. Additionally, another challenge is capturing all R&D opportunities that currently exist.
The SourceCorp Research & Development Tax Services team is comprised of full-time, highly experienced and uniquely qualified R&D professionals. We can help improve your benefits and limit your exposure. Read More →
Section 179D Energy Efficiency Services
You may be eligible for a tax deduction of up to $1.80 per square foot for improving the energy efficiency of your existing commercial buildings or designing high efficiency into new buildings. The Energy Policy Act of 2005 includes a tax deduction for investments in “energy efficient commercial building property” designed to significantly reduce the heating, cooling, water heating, and interior lighting energy cost of new or existing commercial buildings. Read More →
Fort Worth, TX April 28, 2008 – Environmentally sensitive construction practices are now Dallas law, as the City Council unanimously voted to implement numerous “green building” regulations.
This new ordinance requires that all new construction and building improvements placed into service in 2009 and beyond meet certain energy, water, roofing, and lighting efficiency thresholds. For instance, commercial buildings with less than 50,000 square feet will be required to be 15% more energy efficient and use 20% less water. Buildings with more than 50,000 square feet will be required to meet strict LEED (Leadership in Energy and Environmental Design) standards. Dallas’ efforts to mandate green building should serve as a model for other North Texas cities.
The benefits of building green are not just environmental. For business owners and developers, the 2005 Energy Policy Act created Section 179D which allows a significant federal tax deduction for the costs of installing certain energy efficient systems in commercial buildings. The tax deduction offers up to $1.80 per square foot for improving the energy efficiency of existing commercial buildings or designing high efficiency into new buildings. This specifically applies to commercial properties designed to significantly reduce heating, cooling, water heating, and interior lighting energy costs. The deduction also can apply to architects or engineers who design buildings for the City of Dallas. An Energy Efficiency Study can determine the total applicable tax deduction a building owner can qualify for.
For more information on the Dallas Green Initiative, visit www.GreenDallas.net, or to receive a free copy of SourceCorp’s Green Building 179D Energy Efficiency Report please visit SourceCorpTax.com.
Inventory costs are rising (i.e., there is inflation) and LIFO accounting provides a more accurate way of measuring financial performance and calculating tax.
Inflation is in the news. After a more than 15-year hiatus, inflation’s return has been documented in recent months by nearly every business journal in the nation. Economists are examining economic data and concluding that inflation is knocking, once again, at America’s front door. While most view inflation by only its clear downsides, there is at least one tool that CPA’s can use to help turn a negative into a positive for businesses: The Last In, First Out (“LIFO”) accounting method. Read More →