Case Study

Grocery store owner reduces personal property tax bill by 20 percent

Our client’s need

Baker Tilly was engaged to provide recurring tax preparation work for a grocery store owner. After our initial review of the client’s financials, we were concerned that the personal property taxes seemed too high.

Baker Tilly solution

Based on our review of the client’s financials, we noted that their personal property taxes increased substantially from the prior year. After further investigation and review of previously filed personal property tax returns, we identified many assets that had been misclassified. The Baker Tilly team filed an amended personal property tax return to assist our client in reducing their personal property taxes going forward. Upon further review of the client’s fixed asset schedule, we identified an additional $130,000 of costs that potentially qualify as repairs under repair and maintenance regulations and suggested an accounting methods change to be to be consistent with the final and proposed regulations.

Results achieved

As a result of our review, the client recognized a 20 percent deduction on their 2014 annual property tax bill and will continue to see reductions in the future.  Further, the client can reduce taxes by approximately $50,000 in 2014 by deducting repair and maintenance costs previously capitalized and depreciated upon filing the required accounting method change.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely.  The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.