case studies

This is a business founded by a professional service provider. The owner had retained a certified public accounting firm to prepare annual business and personal tax returns, and quarterly payroll tax returns. Although the services provided were of high quality, the business owner required more than just tax preparation services. The business was growing, but it was not producing the results needed to sustain itself. The business owner needed more.

The owner contacted Joseph Salvo CPA. We immediately captured a comprehensive understanding of how the business was operating, and what was needed to make the business viable. All aspects of the business were summarized on a mind map so that the owner could see each element as we developed solutions to each problem identified. The owner attended biweekly meetings to review and update the plan. After ten months, the business was meeting profit goals and on its way to providing the level of income that the owner had hoped to achieve by starting the business.

This is a taxpayer who had her returns prepared by the same independent tax preparer for several years. In 2001, 2002, and 2003, the taxpayer had very low taxable incomes. In 2004, she had a significant amount of income. She suspected that the return for 2004 had not been prepared properly, so she visited a national tax preparation company for help. This company had reached the conclusion that there was a net operating loss that occurred in 2003. The return preparer told the taxpayer that she had no choice but to carry back the loss to year 2001, then forward to years 2002, and 2003, in order to use up the NOL. The taxpayer was upset because she believed the loss should have been carried forward to offset the year with the large income instead of offsetting it against years where the income was taxed at the lowest rates. She was told by the national firm that it was mandatory to carry back the loss and that there was no way to carry it forward. (The election opportunity to carry forward instead of the required carry back had expired.)

After calling the Ohio Society of Certified Public Accountants, the taxpayer was referred to Joseph Salvo CPA. The first thing we did was to start at the beginning and gather all the facts together. We thoroughly researched the problem and based upon the findings determined that the NOL was deductible in 2004. Although the incident creating the loss was based upon checks written in 2003, upon further investigation with the taxpayer, it was determined that the events that created the deduction did not occur until 2004. We then prepared amended the returns for 2001, 2002,2003 and 2004. Instead of owing over $10,000 in 2004 as originally filed by the national firm, the taxpayer's liability was reduced by $5,000, using the amended filings.