OUR THOUGHTS ON:

Schneider Downs Automobile Advisors Attend the AICPA National Auto Dealership Conference

Automobile

By Paul Matvey

Fall is an active time of the year for the Schneider Auto Advisory team members who traditionally participate in the American Institute of Certified Public Accountants (“AICPA”) National Auto Dealership Conference. This year, a number of team members attended the AICPA Conference.

Of interest to team members and our clients were presentations that highlighted:

  • Dealers participating in reinsurance programs can maximize profitability, consider wealth transfer structures, complement the gross profit on sales, participate in underwriting profit and have the opportunity to earn investment income in an arrangement that is acceptable for regulatory and Internal Revenue Service purposes;
  • Jim Ziegler, President and CEO of Ziegler SuperSystems, Inc., an auto dealer consulting firm, offered his comments on the viability and attractiveness of various franchises and offered his forecast for the success of major brands. For more on the subject, please consult with your Schneider Downs representative.
  • The NADA regulatory update is always of interest. In particular, it should be noted that the Internal Revenue Service rejected the NADA request for guidance on whether it is proper for dealers to treat certain payments made pursuant to manufacturer facility image programs as income or a reduction in the basis of the specified depreciable assets. The Internal Revenue Service suggested that the Internal Revenue Code, as well as case law, adequately addresses this issue. For further guidance, please contact your Schneider Downs representative.
  • There were attention-getting presentations emphasizing the need for privacy and protection of e-security information. Dealers must lock down their data, get the DMS to disclose who is getting information from their Dealer Management System and develop and implement electronic security programs.  Avoiding FTC security enforcement with respect to e-security should be bright on the radar of all dealers, with particular attention to peer-to- peer file sharing, security failures and Gramm-Leach-Bliley Act violations. A security assessment is recommended for all dealerships to help mitigate these issues and exposures, including antipiracy actions brought by the Business Software Alliance.
  • Representatives from the Internal Revenue Service provided some direction regarding manufacturers’ facility upgrade programs and the deduction and capitalization of amounts related to tangible property. New regulations on the latter could have significant impact on a dealer’s taxable income for 2012.
  • There are significant changes as a result of the 2010 Affordable Care Act that are effective beginning in 2013, which will be the subject of future Insights.
  • Finally, as manufacturers have rebounded from the recession, be attentive for aggressive pursuits of the franchised auto dealer with respect to increase sales goals, vehicle allocations, terminations, and continued consolidation of brands, manufacturer incentive programs and warranty reimbursement audits.

Your Schneider Downs Advisory Service team members stand prepared to assist you in addressing these and identifying other opportunities to further drive your success.

© 2012 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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