Tax strategies Organization: Manufacturer and distributor of electric parts for cars and trucks. Need: Cost savings to counter increased inventory costs due to tariffs. Outcome: $2 million in savings by switching to the LIFO accounting method. Understanding the situation Profit margins were down significantly for a manufacturer and distributor of electric parts for the automotive industry due to tariffs raising inventory costs. The company has engaged CLA for many years for tax, audit, and consulting services and asked the firm if it had advice for combating increased inventory costs due to tariffs. Learn how the LIFO accounting method could save you money. With the manufacturer’s hefty inventory count and costs, the CLA team thought the LIFO (last-in, first-out) accounting method could be a good cost-saving option. LIFO allows companies to reduce taxable income by deducting higher recent inventory costs against current revenues. In times of rising costs, LIFO may often be a tax-favorable option, but due to its complexity and administrative burden, many companies with inventory shy away from it. However, given high tariffs and inventory costs, CLA ran a projected benefit model and the results were too favorable to ignore. “We appreciate CLA bringing this rare opportunity to us and finding an option for significant savings without added administrative burden.” CFO, manufacturing company Achieving results CLA’s model showed the manufacturer could save six times the standard tax savings if it switched to LIFO in 2025 . The new accounting method cut the company’s taxable income by about $6 million, producing $2 million in tax savings . CLA will undertake the LIFO implementation and annual calculations, verifying favorable methods are applied according to the company’s facts and circumstances. The manufacturer won’t have to change any inventory accounting practices as the LIFO journal entries will be recorded as a top-level entry separate from its current inventory accounting. Contact us Learn how the LIFO accounting method could save you money. Complete the form below to connect with CLA. MORE FROM THE CLA FAMILY © 2026 CliftonLarsonAllen. All rights reserved. "CliftonLarsonAllen" and "CLA" refer to CliftonLarsonAllen LLP. Securities and investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor, member FINRA/SIPC. CliftonLarsonAllen is a Minnesota LLP, with more than 120 locations across the United States. The Minnesota certificate number is 00963. The California license number is 7083. The Maryland permit number is 39235. The New York permit number is 64508. The North Carolina certificate number is 26858. If you have questions regarding individual license information, please contact Elizabeth Spencer . CLA (CliftonLarsonAllen LLP), an independent legal entity, is a network member of CLA Global , an international organization of independent accounting and advisory firms. Each CLA Global network firm is a member of CLA Global Limited, a UK private company limited by guarantee. CLA Global Limited does not practice accountancy or provide any services to clients. CLA (CliftonLarsonAllen LLP) is not an agent of any other member of CLA Global Limited, cannot obligate any other member firm, and is liable only for its own acts or omissions and not those of any other member firm. Similarly, CLA Global Limited cannot act as an agent of any member firm and cannot obligate any member firm. The names “CLA Global” and/or “CliftonLarsonAllen,” and the associated logo, are used under license.