Nathan Hayes

Nathan Hayes is the Manager of Business Development for Red Tray and Editor of

Reps are welcome to contact him at 404.934.3535 or to send him an e-mail if you have questions about how Red Tray can benefit your accounts or with general comments about selling to ECPs.

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What Are the Tax Implications of an ECP’s End-of-Year Inventory?

Posted on December 18, 2009
Filed Under Coaching your Customers |

Many of you have asked me, “Why are my accounts so concerned with selling through any new product at the end of the year?”

Others have told me about accounts who buy $20,000 or more in stock at the end of the year.

In both instances, the ECPs were acting with their next year’s tax bill in mind.  Why would different accounts take opposite actions to better their taxes?

Tax rules on inventory vary by state

To answer this question, I contacted J.R. Armstrong, a CPA at May & Company, LLP.

So how do ECPs unsold inventories affect their tax bills?

“ODs can get taxed on their unsold frame inventory. This varies from state to state, and many cities or counties impose such taxes. In certain states, ODs can get a credit for the amount of taxes they pay that is attributable to inventory.”

How you can coach your accounts on managing their tax exposure:

“I would suggest sending a copy of [their] property tax receipt to [their] CPA when [their] business return gets prepared so they can take advantage of the credit if [their] particular state allows it.”

How should you use this information?

Obviously you and I are not in the business of giving tax advice (nor should we be). But, understanding your customers’ tax considerations will absolutely help you become a credible partner in their success.

Think about this scenario: It’s December and you’ve had a tough 2009. It would be great if you could make a final push for some big orders from your accounts, right?

Not necessarily. If your customers are going to be taxed on their unsold inventories, you could actually be doing little more than increasing their tax bill.

Be a business partner to increase customer loyalty

It is vital in the current economic slowdown that your accounts see you as an ally looking out for their interests, not a salesperson who is only interested in your paycheck.

Take the time to understand and speak to the factors that drive your ECPs’ bottom lines, and they will happily do business with you as a valuable partner to their practices.

Disclaimer: The information and opinions contained on this site are for discussion purposes only and are NOT intended to serve as legal, accounting or investment advice. ©2009 Red Tray. All rights reserved. Not to be reproduced without written permission of the author.


One Response to “What Are the Tax Implications of an ECP’s End-of-Year Inventory?”

  1. Gilbert on March 12th, 2014 4:59 am

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