Auto Dealership Saves $156,000 with Cost Segregation and LIFO Inventory
I own a multi-brand auto dealership in Houston. Dealerships are complex businesses with huge tax implications, and my old CPA was in over his head. He treated us like any other business when dealerships have very specific tax rules and opportunities.
AE Tax Advisors knew the dealership world cold. They performed a cost segregation study on our showroom and service center, separating out floor displays, specialized lighting, HVAC zoning for the service bays, paving, signage, and security systems -- all of which qualify for accelerated depreciation schedules. The reclassified amount was substantial on a property our size.
The LIFO inventory election was the other major play. With hundreds of vehicles on the lot and rising prices, switching from FIFO to LIFO inventory accounting created a large deduction by reflecting the higher-cost inventory in cost of goods sold. AE Tax handled the Form 970 election and managed the LIFO reserve calculations.
They also restructured our entity setup to optimize how the dealership, the real estate, and the parts business interact for tax purposes. Combined first-year savings: $156,000.
What impressed me most was their familiarity with dealership-specific issues. They understood floor plan interest, demo vehicle rules, warranty reserve deductions, and manufacturer incentive accounting without me having to explain any of it. That saved time and gave me confidence they knew what they were doing.
If you own a dealership, you need a tax advisor who specializes in your industry. AE Tax Advisors delivered results my old CPA could not even conceptualize.