Distributors

Distributors and wholesalers of all sizes and types can take advantage of the indefinite income deferral or interest-free loan from the government associated with LIFO. The LIFO inventory method removes the detrimental impact of inflation in both the year of implementation and in each subsequent year, creating a cash stream to fund growth initiatives within your business. Any distributor or wholesaler with over $1M in inventory that is seeing inflation in goods purchased should evaluate LIFO.

A distributor of lumber and constructions materials with just over $19M in inventory elected IPIC method LIFO for 2018, giving them a first year LIFO reserve of over $760,000 – translating to almost$300,000 in after-tax cash savings to them. The second year, their LIFO reserve benefit grew by an additional $275,000.

A commercial HVAC products distributor looking to defer income was able to add $2.3M in COGS deduction by taking advantage of an internal analysis of prices for 2019 with LIFO.

Source Advisors is here to help you determine how LIFO could be of benefit to your company. Depending on the inflation rate and the inventory level, a taxpayer’s cash savings can be quite substantial. We are happy to provide a no-cost estimate and fee quote for you.