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Case Studies
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CASE STUDY #1: High-Net-Worth
Individual |
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| Issue |
A
high-net-worth individual hired a Big 5 accounting firm
to prepare his personal income tax return. Among other
transactions, the return included the installment sale
of a business interest. The Big 5 firm assigned an
inexperienced professional billing at a high hourly rate
to prepare this return. This professional had neither
the time nor the experience to identify all of the
issues relevant to this complex
transaction. |
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TCG
Solution |
Our TCG tax
professionals reviewed the return for accuracy and
identified errors relating to the Alternative Minimum
Tax calculation which was overlooked by the Big 5 tax
professional. By addressing and recording this issue
properly, TCG was able to prepare an amended tax return
which reduced the clients tax liability by $176,000.
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CASE STUDY #2: Manufacturing Company
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| Issue |
The client
was presented with the opportunity to obtain a long-term
manufacturing contract on a one-time basis, and would
report the revenue received on this project as a sole
proprietor. The client completed a portion of the
project in the first year, with the balance completed in
the subsequent year. The client turned over his tax
records to his accountant in a timely manner, but the
accountant did not complete the return until a few days
before the return's April 15th due date. Without
inquiring into the specifics of the transaction, the
accountant prepared the return reporting the total
revenue from the project in the current year. The client
received his return at the 11th hour and confronted a
balance due of several hundred thousand dollars. With no
other options at that late date, the client filed the
return and paid the balance due. |
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TCG
Solution |
The client
came to TCG questioning the propriety of reporting all
of the project's revenue in the first year, as the
project was not complete at year end, and he had not
received full payment from the customer. The client
requested that TCG review the return and determine
whether the transaction had been properly reported.
After reviewing the return and discussing the details of
the transaction with the client, TCG determined that the
transaction qualified for the completed contract method
of accounting, which allowed the client to defer
recognition of a portion of the income to later years.
TCG promptly amended the returns and the client received
a refund from the IRS in excess of
$200,000. |
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CASE STUDY #3: $100MM Distributor with
Multiple Entities and Lines of
Business |
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| Issue |
This client
engaged a Big 5 accounting firm to handle all his
tax-related services. Over a five year period, the
client was passed to three different managers, and a new
staff member was assigned to the account each year. The
client experienced minimal contact with the partner
responsible for bringing his business into the firm and
felt uncomfortable with the level of attention his
business received. He also believed that the constant
staff turnover prevented the Big 5 professionals from
becoming familiar enough with his business to provide
timely and beneficial advice. |
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TCG
Solution |
Initially,
TCG assumed responsibility for
the tax compliance work for all entities and the sole
shareholder, and the client retained the Big 5 firm to
review the returns prepared by TCG. After two years, the
client was so satisfied with TCG' tax expertise that he
concluded that the Big 5 firm provided no added value,
and he ceased using them. In switching their tax
services to TCG, the client reduced compliance fees by
45%, while benefiting from increased partner contact and
consistent staffing. Due to his familiarity and
understanding of the client's various lines of business
and family financial matters, the TCG supervising
partner has become a trust advisor for all of this
client's entities, as well as for members of the
shareholder's family. |
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Talos Consulting Group, LLC
295 Clayton St. #202
Denver, Colorado 80206
Phone: 303-435-9999
Fax: 303-663-1164
©Copyright Talos
Consulting Group, LLC 2008.
295 Clayton,
Suite 202, Denver, Colorado 80206
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