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- Archived Success Stories

Archived Tax Services Success Stories


OUR SOLUTION: Leverage Practical Experience to Offer Expert Advice

Overhearing a conversation between Abraham and the homeowner, we probed further with detailed questions about the job. We advised Abraham to use the “completed contract” method of accounting for this engagement, allowing him to delay payment of the taxes on his $800,000 profit from the renovation until April 15, 2004.


Abraham saved $320,000 in 2002 taxes and was able to plan accordingly for the future amount payable.

Archive # 2 – R&D Expenditures

Research and Development Expenditures

James’ company manufactures for mass distribution unique housewares such as baby cups and specialty beverages. Constant innovation is required to stay “ahead of the curve” associated with the ever-changing preferences of American consumers.

Federal tax law allows a credit against income taxes payable for certain qualified research and development (R&D) expenditures. Beginning in 1999, we aggressively claimed the R&D tax credits for James’ company.

In 2002, James designed a major enhancement of an existing product. This product failed to qualify for the credit since it was a “redesign” rather than brand new. The product was oddly shaped, requiring repeated assembly line tinkering and adjustment for more than a year before the molding process could be automated.

OUR SOLUTION: “Dig Deep” to Find a Tax Break for the Client

KSAT&E performed extensive in-depth research and discovered that creation of a new manufacturing process can qualify for a tax credit even if the product itself is not sufficiently unique to qualify.


James’ company was granted a 2002 tax credit of $42,300.


OUR SOLUTION: Go to Bat on Behalf of Our Clients

We crafted a 22-page “protest” to fight the assessment levied by the IRS. Between 1998 and 2004, we dealt with six different Internal Revenue Service agents, as if our protest was a “hot potato” in the eyes of that organization.


We expect IRS audits to become more prevalent in the coming years, so the need for this type of expert representation will increase. Kelley Sammons Toole & Ellison associates are expertly qualified to assist you as needed.


In early 2004, our client was notified that no additional taxes were owed related to the dividend deduction. 

OUR SOLUTION: Structure the Transaction to Minimize the Tax Burden

Kelley Sammons Toole & Ellison partners and associates regularly read current tax cases and new regulations to keep up-to-date on legal solutions that will benefit our clients. The KST&E partner engaged with this client discovered a relevant tax law case that could support our recommended solution. Using a perfectly legal technique, Ben sold the entire apartment complex to a newly-formed company created to oversee the condo conversion.


Ben saved $840,000 in income taxes by trapping “pre-conversion” profits as a capital gain taxable at a lower rate than ordinary income.


Less than four months after the creation of the new company, our weekly review of Federal tax-related court cases uncovered another tax-saving opportunity. We called Ben and helped him structure his condo sales to take advantage of this new court decision. Our continued diligence on Ben’s behalf resulted in an additional tax savings of $137,000.


Archive # 5IRS Form 1099 Errors – Now What?

Corporate Acquisition via Layered Equity Stakes – Incorrect 1099s

Chester founded a software development company in 2003. Through the years, he invested funds as needed to grow the business.

Chester’s company thrived and was eventually bought out by a much larger public company, resulting in quite a nice profit for Chester. When he received his 1099s for the tax year during which the buyout occurred, the numbers just didn’t seem correct – his tax liability was much higher than expected.

Chester came to us for an ASAP review and assistance since the deadline for tax remittance was looming large and soon.

OUR SOLUTION: Determine the Correct Numbers and File Accordingly

After a series of meetings with Chester, our detailed analysis proved the amounts on the 1099s were incorrect. The layering of his equity investment over time had not been properly computed by the bank issuing the 1099s. We advised Chester on the correct computations, supplying him with documentation that made his case. Chester took this information to the issuing bank. Although his case was made successfully, the institution was not able (or willing) to correct the forms within the time period required to enable Chester to avoid paying penalties and interest on his tax liability. Supported by our multiple detailed analyses to confirm the facts, we filed Chester’s tax return using the correct figures.


Our fast response and the confirmable corrected information saved Chester over $100,000 in tax payments. No blowback occurred from filing the return contrary to the 1099s.