Inflation on the Rise!
Economists are forecasting even broader increases ahead. LIFO accounting may help you or your client save hundreds of thousands, even millions, in tax. Let us quickly determine if your business will benefit from a LIFO election or a change from its current LIFO method to the IPIC LIFO method.

Estimate your first-year LIFO benefit using our Estimation Tool

FAQ - We have the answers to frequently asked questions related to LIFO...

Auto Dealership Accounting/LIFO Solutions

For more than 20 years, SourceCorp has provided auto dealership accounting LIFO solutions. Over the years, our methods and procedures have been tested and proven through numerous IRS audits and Form 3115 approvals. Our LIFO solutions are designed to meet the needs of today’s dealers and CPA’s and are available in the form of in-house services as well as comprehensive software programs:

In-House Service Solutions

• Alternative Method Computations (new cars and light-duty trucks)
• Used Vehicle Alternative Method Computations (used cars and light-duty trucks)

Comprehensive Software Solutions

• Alternative Method Software – AMS (new cars and light-duty trucks)
• Used Vehicle Alternative Method Software – UV-AMS (used cars and light-duty trucks)
  • Black Book® version
  • Kelley Blue Book® version

Consulting Solutions

• Form 3115 preparation or review
• Form 970 preparation or review
• Index conversion / LIFO layer rebasing
• Pool splits or combinations
• Review/recomputation of LIFO layers and/or reports
• LIFO document imaging
• Additional §263A cost capitalization computations

OUR COMMITMENT TO VALUE

SourceCorp makes LIFO affordable for businesses of all sizes. All businesses benefit from timely processing of their calculations and accurate year-end estimates for financial statement conformity. We also provide an inventory/tax planning service to maximize the LIFO benefits and avoid underpayment or overpayment of taxes.

LIFO ACCOUNTING - WHAT IS IT?

Most people know LIFO is an acronym for “Last In, First Out” accounting; however, many don’t know it is a great source of additional cash for their business!

All businesses need more cash. Unfortunately, it's not easy to produce more working capital from a well-run business. That is, until you consider LIFO. By electing LIFO, you can reduce taxable income and pay less tax. The tax you save becomes cash in your pocket.

With LIFO, you can benefit from inflation, high inventories and high tax rates. LIFO uses these negative events to build a fund of cash that can be used by the business owner as he pleases for as long as he wants. When the time comes to pay back the fund, no interest is due. The profit is left for the business owner!

Best of all, a LIFO election won't interfere with the ordinary course of business. Nothing changes but the way you report income.

HOW LIFO WORKS

In a nutshell, LIFO subtracts inflation from inventory costs, deducts it from taxable income, and records it in a LIFO Reserve account on the books. The LIFO benefit grows as inflation widens the gap between current year and past year (minus inflation) inventory costs. This gap is called the LIFO Reserve. The tax savings from the yearly deduction can be invested separately or re-invested in the business. Either way, the investment becomes a profit center for you!

	With LIFO	Without LIFO
Revenue	$35,000,000	$35,000,000
Cost of Goods Sold	$30,000,000	$30,000,000
Operating Expenses	$1,500,000	$1,500,000
Operating Income	$3,500,000	$3,500,000
LIFO Adjustment	$600,000	$0
Taxable Income	$2,900,000	$3,500,000
Income Taxes @ 35%	$1,015,000	$1,225,000
Cash Flow	$2,485,000	$2,275,000
Extra Cash	$210,000	$0
Increased Cash Flow	9.23%	0%