Manufacturing: Prescription for a Healthy Enterprise—With a Little Proactive Business Advice, and Meticulous Attention to Detail, a Machine Manufacturer Averts a $300,000 Tax Liability

A machinery manufacturer approached Tom Froehle, tax partner, when facing a potentially crippling $300,000 tax burden. The company was using a cash basis method of accounting and had not implemented a capitalization policy relating to inventory. Tom performed a thorough review of the Company's operational procedures and helped them implement proper accounting methods. Tom switched the company to an accrual basis and filed the necessary paperwork with the authorities in Washington, D.C. He helped the manufacturer design a spreadsheet and method to calculate and capture capitalized costs. By spreading their tax burden over 4 years, Tom helped the client avert a one-time $300,000 tax liability. The manufacturer, with Tom's help, has improved its accounting procedures and controls. Tom's meticulous attention to detail, and his sound, proactive business advice improved the Company's financial health.