Manufacturing company takes a strategic review of their tax situation

Our client’s need

Yamato, a large manufacturer of weighing equipment and systems for industrial and commercial markets, wanted to undertake a strategic review of their tax situation so as to maximize the tax benefits available to the company.

Baker Tilly solution

After the Baker Tilly tax team was engaged to prepare Yamato’s annual tax returns, the team spent time learning the nuances of the company’s business in order to determine beneficial tax opportunities. As a result of their research and understanding of how tax regulations impact manufacturers, the team brought numerous tax savings ideas to the company during a tax strategy session.

They worked closely with the company’s accounting team to introduce, consult and guide them through the registration process to qualify for a tax incentive program and worked collaboratively with the company to identify and implement tax savings ideas.

Results achieved

As a result of the collaboration between Baker Tilly and Yamato, the company was able to achieve the following tax benefits:

• Completed application for the Wisconsin Manufacturing Credit, resulting in Wisconsin income tax savings totaling approximately six figures
• U.S. Federal Domestic Production Deduction (DPAD), resulting in more than $40,000 of federal income tax savings in 2017, the last year of the program  
• Change in Accounting Method for Prepaid Expenses under IRS Section 481(a) adoption, resulting in more than six figures in federal and state income tax for one year

The timing of the adoption of these benefits was key to the company since the tax benefits were realized at the higher federal corporate tax rate, just prior to the drop in the federal tax rate in conjunction with the 2018 tax reform legislation. As a result of the tax savings, the company was able to achieve positive cash flow.

For more information on this topic, or to learn how Baker Tilly's specialists can help, contact our team.