Auto Dealerships - Audit Technique Guide - Uncle Fed's Tax*Board
Auto Dealerships - Audit Technique Guide - Uncle Fed's Tax*Board
Auto Dealerships - Audit Technique Guide - Uncle Fed's Tax*Board
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10. LIFO<br />
a. Please provide a photocopy, to be retained by the agent, of all Forms 970 filed by the<br />
dealership or any related entity.<br />
b. Have you filed a Form 3115 to avail yourself of the Alternative LIFO Election?<br />
c. What method do you use to compute new car LIFO?<br />
1) Unit?<br />
2) Dollar-Value?<br />
a) External Index (CPI or PPI)?<br />
b) Internal Index (Double-Extension; Index Method; Link-Chain)?<br />
(a)<br />
If an internal index is used how do you derive that index?<br />
(b) If actual invoices are used how far back are they retained?<br />
d. How do you value current-year cost?<br />
1) Earliest Acquisitions?<br />
2) Latest Acquisitions?<br />
3) Average Cost?<br />
4) Other?<br />
e. Which pools do you maintain?<br />
f. How do you treat new items?<br />
g. How do you treat options?<br />
h. Please provide a photocopy, to be retained by the agent, of LIFO reserve computations<br />
from the inception of the election.<br />
i. How do you value inventory for financial reporting purposes? (If LIFO on return and<br />
FIFO on the B/S, possible termination.)<br />
j. How do you account for dealer holdbacks?<br />
A-4
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