LIFO Relief Update

Well, the main tax deadlines for the year have come and gone, and things still keep getting published about LIFO relief. I say, let’s just move on. I called this article “LIFO Relief Update,” but there really isn’t much happening. 

Last week, the AICPA once again released its opinion in support of S. 4105, the Supply Chain Disruption Act, which wants to treat certain liquidations of new motor vehicle inventory as qualified liquidations of LIFO inventory for purposes of the IRC. The AICPA has reached out to eight senators who keep pushing for the relief.

The association believes that LIFO relief based on IRC Code Section 473 should provide the necessary support for auto dealers to replenish their inventories within three years without having to recognize any LIFO reserve, which would save current tax liabilities and cash flow over the next year. 

The Treasury’s response, however, has left us with little confidence. It believes it doesn’t have the authority to grant this relief, which dealers have been talking about since the fall of 2020. I’m certainly not holding my breath for this measure to be passed. Here’s an article I wrote last month that’ll help us understand how a bill can become a law.

So, no relief; no problem! We still believe the best way to tackle your lack of inventory and your tax liabilities is to consider the Inventory Price Index Computation method of accounting, which captures the current inflation of the consumer price index. You can read more about that method here

For even more information or to discuss this method in depth, reach out to Steve Barber or any of our Schneider Downs Auto Advisors.

 

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

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.

© 2024 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.

our thoughts on
Tax, Tax Policy BY Kirk Mitchell
Summary of President Biden’s 2025 Revenue Proposals Released in Treasury’s Greenbook
The Importance of Certified Business Valuation Professionals
Tax, Tax Impact BY Jared Sofranko
IRS Tax-Exempt and Governmental Entity New Compliance Programs
Tax BY Brianna Lundy
Employee Retention Credit: IRS’s Voluntary Disclosure Program Expiring on March 22, 2024
Pillar Two is Here; Is Your Company Ready?
Auto Industry Value and Economic Indicators
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us
Pittsburgh

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.

×