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
Chapter 7 LIFO Background .......................................... 7 - 1 Overview of the Method ............................................... 7 - 1 Origins of the Method ................................................. 7 - 2 A Short History of LIFO Applications: Auto Dealership LIFO and the IRS ............................................................... 7 - 3 Chapter 8 Computing LIFO: Pre Revenue Procedure 97-36.................. 8 - 1 Introduction.......................................................... 8 - 1 LIFO Concepts ...................................................... 8 - 1 Pooling ........................................................... 8 - 11 Foundation Principles................................................. 8 - 14 The LIFO Election................................................... 8 - 16 Computations ...................................................... 8 - 20 Chapter 9 Alternative LIFO for Auto Dealers ............................. 9 - 1 Summary of Rules .................................................... 9 - 1 Computations ....................................................... 9 - 5 Other Considerations .................................................. 9 - 9 Information to request when examining the Alternative LIFO Method ............ 9 - 10 Part III Aftersale Financial Products Chapter 10 Automobile Dealership Aftersale Financial Products .............. 10 - 1 Introduction........................................................ 10 - 1 Extended Service Contracts ............................................ 10 - 1 Credit Life Insurance; Credit Accident and Health Insurance ................... 10 - 2 Chapter 11 Extended Service Contracts.................................. 11 - 1 Agent versus Principal/Obligor.......................................... 11 - 1 Dealer "Agent" Extended Service Contracts................................ 11 - 2 Dealer "Obligor" Extended Service Contract ............................... 11 - 2 Service Warranty Income Method (SWIM) ................................ 11 - 3 Contract Construction ................................................. 11 - 6 Change in Accounting Method Concerns and IRC section 481(a) ................. 11 - 6 Chapter 12 Extended Service Contracts – "Dealer Reserve Accounts" .......... 12 - 1 Chapter 13 The Producer Owned Reinsurance Company (PORC) ............. 13 - 1 Introduction......................................................... 13 - 1 Introduction to Reinsurance............................................. 13 - 1 Considerations for Forming a Producer Owned Reinsurance Company ............................................................... 13 - 2 vi
The Reinsurance Transaction ............................................ 13 - 4 Producer Owned Reinsurance Company Issues .............................. 13 - 5 The Captive Transaction ............................................... 13 - 7 Reinsurance and Auto Dealership After Sale Financial Products................. 13 - 13 The Future......................................................... 13 - 14 Part IV Stand Alone Issues Chapter 14 Advertising Associations .................................... 14 - 1 Introduction........................................................ 14 - 1 Advertising Associations .............................................. 14 - 1 Association Tax Returns .............................................. 14 - 2 Potential Issues ..................................................... 14 - 3 Rules and Regulations ................................................ 14 - 4 Audit Techniques.................................................... 14 - 5 Chapter 15 Covenant Not to Compete ................................... 15 - 1 Case Study ........................................................ 15 - 1 Intangibles Settlement Offer............................................ 15 - 4 Chapter 16 Related Finance Companies.................................. 16 - 1 What is it? ......................................................... 16 - 1 How does it work? .................................................. 16 - 1 Adjustment ........................................................ 16 - 1 Possible applicable legal assertions........................................ 16 - 2 Conclusion.......................................................... 16 - 5 Chapter 17 Passive / Non-Passive Considerations .......................... 17 - 1 Introduction........................................................ 17 - 1 Should this issue be considered?......................................... 17 - 1 The Typical Scenario ................................................. 17 - 1 Audit Techniques.................................................... 17 - 1 Law............................................................... 17 - 2 Conclusion.......................................................... 17 - 3 Chapter 18 Voluntary Employees’ Benefit Associations ...................... 18 - 1 What is a VEBA to which IRC sections 419 and 419A apply? ................... 18 - 1 What do I need?...................................................... 18 - 1 Audit Potential....................................................... 18 - 1 Technicalities........................................................ 18 - 2 Exceptions.......................................................... 18 - 2 Sources of Information ................................................ 18 - 3 vii
- Page 1 and 2: Internal Revenue Service Market Seg
- Page 3 and 4: Preface One of the goals envisioned
- Page 5: Table of Contents Preface .........
- Page 9 and 10: Part 1 General Focus and Procedure
- Page 11 and 12: 1. Type A Return Information Schedu
- Page 13 and 14: Percentage has gone down. The incre
- Page 15 and 16: the principal shareholders to finan
- Page 17 and 18: Rents $ 500,000 Interest $ 50,000 C
- Page 19 and 20: Conclusion "Financial status" is on
- Page 21 and 22: Chapter 2 Getting Started The key t
- Page 23 and 24: entities and their purpose and rela
- Page 25 and 26: It is recommended that officer comp
- Page 27 and 28: Chapter 3 Standard Audit Index Numb
- Page 29 and 30: Chapter 4 Books and Records Charact
- Page 31 and 32: c. Reconcile (2): Beginning Trial B
- Page 33 and 34: 3 Repair Order Sales 4 Parts Sales
- Page 35 and 36: Conclusion Although intimidating at
- Page 37 and 38: Chapter 5 Balance Sheet Why do we c
- Page 39 and 40: When an adjustment to a balance she
- Page 41 and 42: Part 2 Inventory Chapter 6 General
- Page 43 and 44: . Purchasing c. Handling, processin
- Page 45 and 46: dealerships use specific identifica
- Page 47 and 48: Chapter 7 LIFO Background Overview
- Page 49 and 50: A Short History of LIFO Application
- Page 51 and 52: improper inflation through unwarran
- Page 53 and 54: Introduction Chapter 8 Computing LI
- Page 55 and 56: The double extension index formula
The Reinsurance Transaction ............................................ 13 - 4<br />
Producer Owned Reinsurance Company Issues .............................. 13 - 5<br />
The Captive Transaction ............................................... 13 - 7<br />
Reinsurance and <strong>Auto</strong> Dealership After Sale Financial Products................. 13 - 13<br />
The Future......................................................... 13 - 14<br />
Part IV<br />
Stand Alone Issues<br />
Chapter 14 Advertising Associations .................................... 14 - 1<br />
Introduction........................................................ 14 - 1<br />
Advertising Associations .............................................. 14 - 1<br />
Association Tax Returns .............................................. 14 - 2<br />
Potential Issues ..................................................... 14 - 3<br />
Rules and Regulations ................................................ 14 - 4<br />
<strong>Audit</strong> <strong>Technique</strong>s.................................................... 14 - 5<br />
Chapter 15 Covenant Not to Compete ................................... 15 - 1<br />
Case Study ........................................................ 15 - 1<br />
Intangibles Settlement Offer............................................ 15 - 4<br />
Chapter 16 Related Finance Companies.................................. 16 - 1<br />
What is it? ......................................................... 16 - 1<br />
How does it work? .................................................. 16 - 1<br />
Adjustment ........................................................ 16 - 1<br />
Possible applicable legal assertions........................................ 16 - 2<br />
Conclusion.......................................................... 16 - 5<br />
Chapter 17 Passive / Non-Passive Considerations .......................... 17 - 1<br />
Introduction........................................................ 17 - 1<br />
Should this issue be considered?......................................... 17 - 1<br />
The Typical Scenario ................................................. 17 - 1<br />
<strong>Audit</strong> <strong>Technique</strong>s.................................................... 17 - 1<br />
Law............................................................... 17 - 2<br />
Conclusion.......................................................... 17 - 3<br />
Chapter 18 Voluntary Employees’ Benefit Associations ...................... 18 - 1<br />
What is a VEBA to which IRC sections 419 and 419A apply? ................... 18 - 1<br />
What do I need?...................................................... 18 - 1<br />
<strong>Audit</strong> Potential....................................................... 18 - 1<br />
Technicalities........................................................ 18 - 2<br />
Exceptions.......................................................... 18 - 2<br />
Sources of Information ................................................ 18 - 3<br />
vii
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