How Wholesalers/Distributors Are Increasing Cash Flow & Reducing Taxes

FORT WORTH, Texas--(Business Wire)--
If you're a wholesaler, distributor or a company that has
substantial inventory, you can improve cash flow by reducing the cost
of your closing inventory value.

For more than 70 years, and especially in times of inflation, the
LIFO inventory method has proven to be an extremely effective tax
management tool to reduce taxable income and taxes.

Real Case Studies

-- An $80 million dried food distributor with $5.8 million in
ending inventory reduced taxable income by $325,000 the first
year.

-- A $50 million restaurant supply wholesaler with $12.6 million
in ending inventory reduced taxable income for 2007 by
$740,000.

-- A wholesaler of poultry products with $12 million in ending
inventory reduced taxable income for 2007 by nearly $1.1
million.

-- A windshield distributor was on LIFO for 20 years and their
then-current LIFO method was showing deflation for the year.
Running a free initial analysis, we discovered that under the
IPIC LIFO method, when considering 14 scenarios, two were
inflationary. Selecting the best method for this client, their
LIFO reserve increased by $360,000 versus recapturing $120,000
in reserve providing an income difference of nearly $500,000.

-- A wholesale pool and spa supply distributor had been on LIFO
for 20 years and concerned that their LIFO reserve could be in
jeopardy if they were audited. We ran several scenarios and
suggested that they change to the IPIC method. As a result,
they received audit protection and tripled their cumulative
LIFO reserve.

These substantial tax savings were realized using the last in,
first out (LIFO) method of pricing inventory.

Under the LIFO inventory method, the last inventory purchased is
treated as the first inventory sold. This differs with other inventory
methods such as first in, first out (FIFO) where the earliest
inventory purchased is treated as the first inventory sold.

The Benefit

In periods of rising costs the LIFO method decreases the value of
ending inventory compared to the FIFO method. Lower ending inventory
results in higher cost of goods sold which in turn lowers taxable
income and the tax liability businesses must pay. This allows
companies to use the tax savings to reinvest in their businesses. In
summary, the LIFO inventory method, similar to other accounting
expenses such as amortization and depreciation, increases a company's
cash flow by reducing income and tax liability.

In a period of rapid inflation like we are experiencing now, if
you haven't yet made the switch to LIFO accounting, now is the time to
do so.

Inventory Price: IPIC LIFO

Like other dollar value LIFO methods, the Inventory Price Index
Computation (IPIC) LIFO method compares current year costs with base
year costs to develop a measurement of inflation. The big difference
is that the IPIC method uses external, government-published indexes
rather than indexes that are a result of a business' internal prices.

Many wholesalers and distributors realize lower inventory values
and better tax savings under the IPIC LIFO method. Whether switching
cost flow methods from FIFO to LIFO or simply moving from an existing
internal LIFO method, the IPIC LIFO method can increase current and
future year deductions by reducing ending inventory compared to other
methods.

Advantages of the IPIC method

-- Is the only IRS approved method

-- Audit protection from other LIFO methods

-- With Form 3115, the IRS is precluded from changing the same
method of accounting in an earlier year

-- Potentially better tax benefits compared to other LIFO methods

-- Ability to model the computations (within limits) to maximize
tax benefits

-- A simplistic, straightforward approach that saves
administrative time

We Make LIFO Simple

As the largest company in North America specializing in LIFO, we
have provided our services, software and consulting to thousands of
businesses and their CPAs. It's our mission to make LIFO safe, easy
and cost effective for wholesalers, distributors, and manufacturers of
all sizes - our clients have year ending inventories ranging from as
low as a few thousand dollars to billions of dollars.

We take the headache out of LIFO computations and make it simple.
We know that tracking costs in various pools of inventory is very
tedious, but we combine the research, technology and experience
necessary to maximize the benefits of LIFO yielding substantial tax
benefits. Since 1983 clients have recognized that our LIFO accounting
specialists are always up-to-date on all the latest LIFO regulations,
we're just a phone call away to address all of their LIFO needs, a
full-time Account Manager is assigned to each client and CPA, we are
Sarbanes-Oxley compliant, and we will defend our methods and
procedures, at no cost to the client if ever questioned in an IRS
audit. Plus, we are the only LIFO firm providing an industry-first
100% guarantee.

Free Initial LIFO Analysis - You Have Nothing To Lose & Everything
To Gain

In periods of rising inflation and prices, the LIFO method is an
effective method of increasing cash flow and reducing tax liability.
Now is the time to investigate this cash flow savings opportunity.

For your free LIFO analysis visit the following link:
http://sourcecorptax.com/contact/contact_srcp.htm.

About SourceCorp Professional Services

Celebrating their 25th year in business, SourceCorp Professional
Services is the leading provider of LIFO Accounting, R&D Tax Credit
Studies, Cost Segregation Studies, and Green Building 179D
Certification/Analysis in North America. With a specialized team of
nearly 70 professionals and with offices located throughout the
country, accounting firms realize unparalleled experience, services,
and trust. SourceCorp serves many of the nation's most prominent CPA
firms, Associations, and Fortune 1000 companies. For more information,
please visit: http://www.SourceCorpTax.com.

SourceCorp Professional Services
Doug Morrell, 817-732-5494 x151
Marketing Director

Copyright Business Wire 2008