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Construction company defers tax burden, invests for the future

BerryDunn’s construction team partners with clients to provide meaningful insights on best practices in building capacity, stabilizing cash flow in growth, reducing tax liabilities, capturing reimbursable local taxes, and navigating state nexus. We thrive on helping each client gain control over opportunities and challenges unique to their business, ownership structure, and project mix.

The challenge

An S Corporation construction company with a revenue of approximately $15 million sought assistance from the BerryDunn construction team. The client was looking for ways to defer their tax burden in order to keep money in the company and invest in their future growth.

The solution

BerryDunn reviewed the tax accounting methods and determined that there was an opportunity to convert to the completed contract method due to favorable changes in the tax laws that the client was newly eligible for. The client’s previous firm, which did not have expertise in the construction industry, was unaware of these alternatives. After reviewing their current accounting methods, we modeled and prepared an accounting method change for the client.

The outcome

The client was able to successfully defer significant gross profit and the associated tax bill related to contracts that were not yet complete. Using the funds saved from taxes, the company was able to invest in areas of the company to support future growth. Assuming the client will continue to grow, the deferred gross profit and tax are likely to grow as well.

BerryDunn’s construction team offers a range of services that strengthen confidence in reported results, financial position, and value, including tax and financial planning, acquisition, due diligence, quality of earnings assessments, ESOP feasibility and formation consulting, business valuation, and more. Learn more about our team and services.

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  • Linda Roberts
    Construction, Manufacturing, Real Estate
    T 207.541.2281