Automotive - Specialty Tax Advisors

The Automotive sector involves high capital investment, technological innovation, R&D, and adoption of new technology, all areas that are candidates for tax incentives.

Ideal Candidates:

Automotive OEMs and tiered suppliers
EV manufacturers and battery developers
Dealerships and service chains with real estate
Fleet operators investing in electric or fuel-efficient vehicles

Here’s an overview of how Automotive companies can benefit.

Research & Development (R&D) Tax Credit

Automotive companies are prime candidates for R&D incentives due to continual product development:

New vehicle design, engine optimization, safety systems
Lightweight materials, EV and battery innovation
Autonomous vehicle systems, software integration
Testing, prototyping, and process improvements

Benefit: Up to 10% of qualified R&D expenses in the form of a federal tax credit, with state credits available.

Cost Segregation

Automotive dealerships, manufacturing plants, parts distribution centers, and repair facilities often involve large real estate investments:

Breaks down the property into shorter-life assets (e.g., lighting, lifts, finishes, electrical, wash bays)
Accelerates depreciation schedules

Benefit: 20–50% of the building’s cost reclassified into 5-, 7-, or 15-year assets, generating significant early-year tax savings.

45L Tax Credit

If a manufacturer or dealership group provides residential housing (e.g., for rural workforce or company-owned homes):

$5,000 per unit for energy-efficient construction meeting ENERGY STAR or Zero Energy Ready standards

Benefit: Direct reduction in federal tax liability.

What Services are Included?

179D Tax Deduction

For auto plants, dealerships, or service centers implementing energy-efficient upgrades:

Up to $5.00 per square foot deduction for HVAC, lighting, or building envelope improvements

Benefit: Immediate tax write-off for qualifying retrofits or new construction.

Section 263A (Uniform Capitalization Rules) & Fixed Asset Reviews

Particularly relevant for:

Dealerships with large inventories and capital improvements
Manufacturers with tooling, line upgrades, or custom equipment

Benefit: Identifies misclassified assets and enables retroactive deductions via §481(a) adjustment.

EV & Clean Vehicle Incentives

Applicable to manufacturers, fleet operators, or dealerships:

EV manufacturing tax credits (e.g., under Section 45X for battery components)
EV charging station credits (30% up to $100,000 per station)
Consumer credits that drive dealer volume

Benefit: Strategic planning can maximize incentives across the value chain.

IC-DISC (Interest Charge – Domestic International Sales Corporation)

Export Tax Incentive for US manufacturers of vehicles or parts that are exported:

IC-DISC allows export profits to be taxed as qualified dividends

Benefit: 10–15% reduction in federal tax on export-related income.

Form 3115

A Form 3115 - Application for Change in Accounting Method, allows businesses to request approval from the IRS to change their accounting method. This form might be required when making changes to claim various tax credits.

Changing Depreciation Method
Inventory Method
Accounting for Repairs vs. Capital Improvements

Benefit: Tax relief through audit protection, improved financial reporting accuracy, potential tax benefits, and compliance with IRS Regulations.

Payroll Tax Reduction Strategy

Companies with W2 employees will qualify for this tax credit program.

Proven ROI with significant Payroll Tax savings recognized on first payroll cycle
Eligible employees see an increase in net take-home pay
Zero upfront or out-of-pocket cost to employer or employee
Attract and retain top talent
Audit compliance

Benefits: Employer FICA Tax Savings is $56.80 per month or $681.60 per year per eligible employee. Employee FICA/State/Federal Tax Savings includes an approximate 3-4% increase in monthly net take-home pay.