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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Item in Existence in the Prior Year, but Not Stocked<br />
If an item in ending inventory was not stocked by the automobile dealer at the end of the prior<br />
year, the automobile dealer must determine the prior-year-base vehicle cost by using a<br />
manufacturer’s price list in effect as of the beginning of the last month of the prior taxable year.<br />
Computations<br />
The computational methodology is illustrated in the following example for ABC Lexus who<br />
elected Alternative LIFO for its taxable year ending December 31, 1992.<br />
Ending Inventory Schedule<br />
(This example is limited to a new car pool.)<br />
Stock Model<br />
Number Number Description Amount<br />
45810 9100A LS400 4-DR Sedan $ 33,065.00<br />
45820 9010A ES250 4-DR Sedan 19,079.00<br />
45822 9100A LS400 4-DR Sedan 35,633.00<br />
45853 9100A LS400 4-DR Sedan 33,777.00<br />
45854 9010A ES250 4-DR Sedan 18,941.50<br />
$140,495.50<br />
Step # 1<br />
Obtain the actual invoice for each vehicle in the ending inventory.<br />
Step # 2<br />
Group all of the invoices from Step 1 by item category. In this example, we have two (2) item<br />
categories as follows:<br />
Model #<br />
9100A<br />
9010A<br />
Description<br />
LS400 4-DR Sedan<br />
ES250 4-DR Sedan<br />
9-5
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