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
10. LIFO a. Please provide a photocopy, to be retained by the agent, of all Forms 970 filed by the dealership or any related entity. b. Have you filed a Form 3115 to avail yourself of the Alternative LIFO Election? c. What method do you use to compute new car LIFO? 1) Unit? 2) Dollar-Value? a) External Index (CPI or PPI)? b) Internal Index (Double-Extension; Index Method; Link-Chain)? (a) If an internal index is used how do you derive that index? (b) If actual invoices are used how far back are they retained? d. How do you value current-year cost? 1) Earliest Acquisitions? 2) Latest Acquisitions? 3) Average Cost? 4) Other? e. Which pools do you maintain? f. How do you treat new items? g. How do you treat options? h. Please provide a photocopy, to be retained by the agent, of LIFO reserve computations from the inception of the election. i. How do you value inventory for financial reporting purposes? (If LIFO on return and FIFO on the B/S, possible termination.) j. How do you account for dealer holdbacks? A-4
k. Do you receive rebates from anyone? If so, how are these items treated (i.e., tires, cost of sales, banks)? 11. IRC section 263A a. Is there any off site storage? b. Who does the purchasing? c. How are prep costs handled? d. Please provide to agent a photocopy of the IRC section 263A organizational chart identifying job positions and descriptions. 12. Warranties; Credit Life a. What type of extended service and credit life contracts do you sell? b. How do you record sales and expenses? Which accounts are used? c. Whose contracts do you sell? Are you a principal or do you sell as an agent? d. Is the extended service contract between you and the customer or between the customer and another entity? If another entity, who? e. Are any related entities, business organizations, associations, or individuals involved in any manner or degree with a captive insurance company? f. Are any related entities, business organizations, associations, or individuals involved in any manner or degree with any offshore insurance company? g. Are any related entities, business organizations, associations, or individuals involved in any manner or degree with any reinsurance agreements? h. Does any related entity, business organization, association, or individual have any involvement in any manner or degree with any retrospective arrangement? i. Does any related entity, business organization, association, or individual have any involvement in any manner or degree with any administrator in regard to the sale of any extended service or credit life contract? j. Does any related entity, business organization, association, or individual have any involvement in any manner or degree with any reserve, trust, or annuity account in regard to the sale of any extended service or credit life contract? k. Does any unrelated party or person hold any reserve, trust, or annuity on behalf of any A-5
- Page 129 and 130: One of the assets specifically iden
- Page 131 and 132: Where a covenant may be enforced it
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- Page 135 and 136: 1. Spread income over a number of y
- Page 137 and 138: RELATED FINANCE COMPANY CHECKSHEET
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- Page 141 and 142: 3. Question the taxpayer directly w
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- Page 145 and 146: Technicalities Under the provisions
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- Page 149 and 150: Cash 300 Accounts Receivable 300 2.
- Page 151 and 152: The dealer sells the note to a fina
- Page 153 and 154: For purposes of this rule, an "empl
- Page 155 and 156: 10) relationship of stockholder-off
- Page 157 and 158: purely for services. See Treas. Reg
- Page 159 and 160: Howard Sole, Inc. v. Commissioner,
- Page 161 and 162: Milford Motor Co. v. United States,
- Page 163 and 164: new pool for additional, subsequent
- Page 165 and 166: 6. The finance company is entitled
- Page 167 and 168: when the back-end distributions are
- Page 169 and 170: The transfer of the installment con
- Page 171 and 172: Report as a Loan or an Assignment
- Page 173 and 174: Reported as a Sale… (How it Shoul
- Page 175 and 176: Other Sources of Information IRC se
- Page 177 and 178: Part 4 Appendices Appendix A Initia
- Page 179: 2) Adjusting Journal Entries 3) Tax
- Page 183 and 184: f. Employee Benefits 1) Form 5500?
- Page 185 and 186: Appendix B Balance Sheet Section -
- Page 187 and 188: . Dealership financing If the deale
- Page 189 and 190: f. Dealer Reserve Holdbacks 3. Inve
- Page 191 and 192: Once the existence of a shareholder
- Page 193 and 194: Despite the fact the computation ma
- Page 195 and 196: corporate minutes if material. d. L
- Page 197 and 198: Appendix C Definition of an Item Co
- Page 199 and 200: two cars of the same model can vary
- Page 201 and 202: Appendix D An Analysis of the Wrigh
- Page 203 and 204: (D) also moved (DLRS) income to be
- Page 205 and 206: The court did not allow (D)’s cla
- Page 207 and 208: Appendix E Glossary The following t
- Page 209 and 210: FIFO: An inventory cost flow assump
- Page 211: PLATFORM: A vehicle platform is the
k. Do you receive rebates from anyone? If so, how are these items treated (i.e., tires, cost of<br />
sales, banks)?<br />
11. IRC section 263A<br />
a. Is there any off site storage?<br />
b. Who does the purchasing?<br />
c. How are prep costs handled?<br />
d. Please provide to agent a photocopy of the IRC section 263A organizational chart<br />
identifying job positions and descriptions.<br />
12. Warranties; Credit Life<br />
a. What type of extended service and credit life contracts do you sell?<br />
b. How do you record sales and expenses? Which accounts are used?<br />
c. Whose contracts do you sell? Are you a principal or do you sell as an agent?<br />
d. Is the extended service contract between you and the customer or between the customer<br />
and another entity? If another entity, who?<br />
e. Are any related entities, business organizations, associations, or individuals involved in any<br />
manner or degree with a captive insurance company?<br />
f. Are any related entities, business organizations, associations, or individuals involved in any<br />
manner or degree with any offshore insurance company?<br />
g. Are any related entities, business organizations, associations, or individuals involved in any<br />
manner or degree with any reinsurance agreements?<br />
h. Does any related entity, business organization, association, or individual have any<br />
involvement in any manner or degree with any retrospective arrangement?<br />
i. Does any related entity, business organization, association, or individual have any<br />
involvement in any manner or degree with any administrator in regard to the sale of any<br />
extended service or credit life contract?<br />
j. Does any related entity, business organization, association, or individual have any<br />
involvement in any manner or degree with any reserve, trust, or annuity account in regard<br />
to the sale of any extended service or credit life contract?<br />
k. Does any unrelated party or person hold any reserve, trust, or annuity on behalf of any<br />
A-5
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