Auto Dealerships - Audit Technique Guide - Uncle Fed's Tax*Board

Preface
One of the goals envisioned with this Audit Techniques Handbook is to achieve a high level of
proficiency in the way we conduct our examinations of Automobile Dealerships. In addition, by
establishing and maintaining close contact with other Industry Specialists, including the Motor
Vehicle Industry Specialist, National Office, Appeals and District Counsel, we can maximize the
effectiveness of our efforts.
This Guide is divided into five parts:
Part I leads the agent through the examination; from pre-audit through the Books and
Records, concentrating on the fulcrum concept of "Financial Status."
Part II illustrates Inventory, concentrating on LIFO computations before and after the
implementation of Rev. Proc. 97-38 I.R.B. 1997-33, 43 (July 31, 1997).
Part III discusses Aftersale Financial Products sold by auto dealerships. This includes
consideration of Non Captive issues, including Rev. Procs. 92-97 and 97-38, Captive Issues
and Producer Owned Reinsurance Companies.
Part IV considers "stand alone" topics, unique to automobile dealerships.
Part V is the Appendix which includes comprehensive case studies, legal authorities, issue
analysis, and a glossary of terms.
In order to encourage technical contributions from agents across the country, this text was
produced in accordance with the "Living Document" idea, which should allow for the inclusion of
important technical ideas and opinions.
No material in this Guide, should be construed as representing the official position of the Internal
Revenue Service. The reader is directed to the Internal Revenue Code, the Income Tax
Regulations and other relevant official publications to obtain the official position of the Service
and for further guidance, as deemed necessary. The scope of this guide is limited to assisting the
revenue agent in the completion of Auto Dealership cases.
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