Client Profile

Industry: RV Dealership Entity Type: S Corporation Ownership Structure: Two Partners Geographic Footprint: Midwest region Annual Revenue: $119 Million Number of Employees: 189

Issue

The owners of an RV dealership were pleasantly surprised to discover that, with the assistance of CBIZ professionals, their business qualified for an Employee Retention Tax Credit (ERTC), resulting in a $2.7 million refund. However, this refund came with a $1.1 million tax liability. With thechallenges of rising interest rates, inflation affecting their inventory and a growing volume of inventory, the upcoming tax season appeared unfavorable for the dealership.

Solution

The Difference a Partner Can Make

CBIZ professionals, after thorough analysis and discussions with the dealership, identified substantial tax-reduction opportunities. Recognizing the dealership’s potential, they recommended implementing the last-in, first-out (LIFO) accounting method for inventory. This decision offered significant tax savings and helped offset the tax liability associated with the ERTC. Upon reviewing the details and understanding the benefits, the dealership agreed that adopting the LIFO method would be favorable.

Outcome

Switching to the LIFO accounting method yielded considerable benefits, with tax reductions amounting to $820,000. Considering the tax implications of the ERTC were $1.1 million, this strategic move enabled the dealership to reduce its cash outflow by $314,000. The owners were delighted with the result, as it gave them increased flexibility in managing their resources.

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*MHM (Mayer Hoffman McCann P.C.) is an independent CPA firm that provides audit, review and other attest services, and works closely with CBIZ, a business consulting, tax and financial services provider. Copyright © 2023, CBIZ, Inc. All rights reserved.

Copyright © 2023, CBIZ, Inc. All rights reserved.