If we hold our breath any longer while waiting for Washington to rule on some Last-In-First-Out (LIFO) relief, we’re going to pass out.
Back in June, we wrote an Our Thoughts On article about LIFO Liquidation Relief for Automotive Dealers. Under Internal Revenue Code 473, the U.S. Treasury can issue a notice to provide relief, due to supply chain interruption, regarding LIFO reserve recapture.
As always, we try to be proactive when it comes to auto dealers’ pain points. But now, tax filing season has started. Returns need to be submitted. Some tax needs to be paid within the next month. So, as joint frustration builds with the Treasury, we sought out and found a potential solution to your LIFO problem.
We recommend exploring the Inventory Price Index Computation, a calculation based on the consumer price index (CPI) issued by the U.S. Bureau of Labor Statistics. As you’re probably feeling it, that CPI has increased pretty significantly lately. Plus, we can include parts and used vehicles to the LIFO calculation, with which we can manage your LIFO recapture even without the Treasury’s LIFO relief.
As we sit here at the end of February, we can’t wait any longer for the Treasury to act. They’ve not responded to the AICPA or the NADA, and we all have been talking about this LIFO relief since October 2020 when the inventory issues started.
Reach out to Steve Barber or any of our Schneider Downs Auto Advisors to discuss your inventory situation.
You’ve heard our thoughts… We’d like to hear yours
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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.