We have several hundred clients that entrust us to provide LIFO solutions. Here are some of their LIFO Success Stories:
A small CPA firm outsourced LIFO calculations for about 10 of their clients to a multinational company. Over the course of a couple of years, LIFOPro took over the calculations for all their clients. Furthermore, LIFOPro determined that two of the CPA firm’s clients had not adopted LIFO previously because the proposed costs from the other service provider were too high for the size of their companies. These two clients eventually adopted LIFO after determining that LIFOPro’s costs were significantly lower than the other service provider’s costs.
A company contacted us to determine if LIFO would make sense for them based on a referral from their CPA firm (the CPA firm referred one of their clients to LIFOPro in the past and enjoyed the security of knowing that they weren’t forcing their client to seek the help of competing firms that could help them with LIFO). The company’s LIFO Election Benefit Analysis showed they would have had a $2.7 million LIFO reserve if they would have elected LIFO 20 years ago and would have $350,000 of LIFO expense in they were to elect LIFO in the current year. LIFOPro offered a LIFO calculation outsourcing solution bundled with IRS LIFO Election forms preparation at a low-cost, and the company subsequently elected LIFO and continues to use our services annually.
A CPA firm contacted us about a retail farm & home hardware retailer to determine if they were a good candidate for LIFO. The company’s LIFO Election Benefit Analysis Report indicated that they would have had 1.3% average annual inflation & LIFO reserve of nearly $4.5 million if they would have elected LIFO 20 years ago and would have current year LIFO expense of nearly $600,000 if they decided to elect LIFO in the year of the analysis. We offered a low-cost LIFO calculation outsourcing solution bundled with IRS LIFO Election Forms preparation. The company subsequently utilized our services, adopted LIFO & continues to be a client today.
A CPA firm contacted us about a set of related-party winery clients that were on LIFO that had been using questionable LIFO methods and procedures. LIFOPro completed a complimentary Best LIFO Practices Methods Review to determine that both companies were using multiple LIFO methods considered impermissible by the IRS. LIFOPro performed a pro forma IPIC LIFO calculation to estimate the average annual inflation and LIFO reserve for the prior 20 years. We also determined that the current year IPIC LIFO inflation was going to be better than their current LIFO methods being used and offered a low-cost LIFO calculation outsourcing solution bundled with the Change in Accounting Method IRS Forms preparation & a low-cost estimate for outsourcing their LIFO calculation in subsequent years. The CPA firm jumped on this opportunity & elected to utilize our services in future years.
A company on LIFO whose accounting department was short-staffed due to constant expansion was sold on outsourcing their LIFO calculation to a multinational LIFO services provider. It turned out that the service provider’s annual LIFO outsourcing costs were nearly three times higher than LIFOPro’s. Upon reviewing the company’s LIFO documentation and providing a LIFO outsourcing cost estimate, the company immediately decided to utilize LIFOPro’s outsourcing services. This company has been a client for over ten years now, and they believe that our service & support quality are far superior to their former service provider (there are at least 30 other companies whom have switched from the service provider described above to LIFOPro.
A medical equipment manufacturer was using internal index LIFO. They didn’t elect the IPIC method several years ago despite their Big 4 CPAs’ recommendation because they believed the task of inventory sorting would be very time consuming. We visited their web site and saw that almost all of their inventory could be classified into a single PPI category. This allowed us to run pro forma IPIC calculations without any input from them other than their LIFO history schedule. The pro formas showed if they had used the IPIC Method they would have reduced their taxable income by an additional $1 million for the current year & an additional $5 million over the last ten years. They adopted the IPIC Method for tax & continue to enjoy the additional LIFO tax savings.
A retail grocery chain used what we call “Simplified Simplified LIFO” for which a single index per pool is used & the pools are the standard grocery industry departments with a separate set of pools for each store. Some departments, amounting to about 15% of total inventory, were not on LIFO. We combined their pools into a single set of pools for each corporation and elected the IPIC pooling method. This resulted in using the minimum number of pools possible to maximize LIFO tax benefits (by minimizing LIFO layer erosions). We provided the client instructions to enable them to sort their FIFO inventory by the minimum number of CPI categories to comply with IRS Regs., expanded the LIFO election to include all goods, thereby increasing their LIFO tax savings.
A retail grocery chain used eleven pools corresponding to standard grocery business departments. We reduced the number of pools used down to five & increased their tax savings by using the IPIC pooling method. We corrected numerous layer pricing errors in their layer history resulting from decrement calculation errors.
A convenience store chain using the IPIC method had set up seven LIFO pools because they initially elected a non-IPIC pooling method. We showed them they could reduce this to three pools & increase their tax savings by using the IPIC pooling method. The client used Retail LIFO & had recently experienced a large LIFO reserve decrease because of cost complements being affected by increased margins. We recommended that they use Cost LIFO to eliminate their LIFO reserve being affected by margin changes. Not all goods were on LIFO. We expanded their LIFO election to include all goods thereby increasing their tax savings.
A discount store chain switched to the IPIC method using PPI indexes two years ago. We performed a Best LIFO practices Methods Review and determined that the company had assigned incorrect PPI categories to their inventories. We performed pro forma calculations that showed the client would get a significantly larger LIFO expense for the most recent year if they sorted their drug inventories into the appropriate PPI categories.
A foodservice distributor was not using LIFO. Food businesses are excellent candidates to use LIFO because almost all food categories have inflation over time. Using the current year inventory breakdown by PPI category, we performed a LIFO Election Benefit Analysis. As expected, the results showed an average annual inflation rate of about 2%. The client adopted LIFO and was able to significantly reduce their taxable income & improve cash flow.
A manufacturing company using Double-Extension internal index LIFO would have had a 10% decrease in their pool index despite having some inflation in their raw material costs. This would have wiped out their $3 million LIFO reserve. Using a rough estimate of their most recent year end FIFO balances broken down by PPI category, we ran a pro forma Link-Chain IPIC LIFO calculation for the past 20 years. This showed the LIFO inflation in past years would have created a $1 & $5 million higher LIFO reserve in current and past years if Link-Chain IPIC LIFO was used. The company subsequently switched to Link-Chain IPIC LIFO and avoided unexpected material LIFO fluctuations in the future (this situation is quite common for companies using Double-Extension internal index LIFO).
A home improvement products retailer used the IPIC method and CPI indexes. We advised them to switch to using PPI indexes because they were about 2% higher than CPI inflation and had been for several years. They did so and increase their tax savings considerably. They made this change for tax purposes only and now enjoy the best of both financial reporting and tax worlds, deflation for book LIFO and inflation for tax LIFO.
A company that had lost a considerable amount of its accounting staff due to downsizing their accounting department, and the remaining employees were overburdened with the work of the staff that had been laid off, including an estimated 200 hours/year of work in completing their LIFO calculation. LIFOPro reviewed this company’s LIFO documentation and determined that LIFOPro could complete the work in under 50 hours and subsequently provided a competitive LIFO calculation outsourcing cost estimate. The company decided to outsource their LIFO calculation and their accounting staff was utterly grateful to be able to hand off what they considered to be a big mess otherwise for them.
A CPA firm acquired a new audit client by initially proposing to complete their LIFO calculation at a fraction of the cost of the company’s current LIFO service provider. The firm subsequently determined the work required to complete their new client’s LIFO calculation involved far more time and effort than they could afford. LIFOPro reviewed their client’s LIFO documentation, designed a procedure to complete the client’s LIFO calculation while staying within the budget they initially proposed.
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