The IRS provides an alternative dollar-value last-in, first-out (LIFO) pooling method, referred to as the Vehicle-Pool Method, for cars and light-duty trucks. Only retail dealers and wholesale distributors (collectively, “resellers”) engaged in the business of retail sales of new automobiles or new light-duty trucks, such as you, may use the alternative LIFO method. Our nyc cpa office can help you understand how this method can benefit your business
The Vehicle-Pool Method allows a reseller to establish a New Vehicle pool for inventories of new vehicles and a Used Vehicle pool for inventories of used vehicles. “Vehicles,” for this purpose, include cars, light-duty trucks, and crossover vehicles, including SUVs, minivans, and other similar vehicles. “Light-duty trucks” are defined as trucks with a gross vehicle weight of 14,000 pounds or less. These trucks also are referred to as class 1, 2 or 3 trucks.
The use of the alternative LIFO method by and its acceptance by the IRS is conditioned on the application of several LIFO sub-methods, definitions and special rules. In addition, a reseller subject to the LIFO pooling requirements must use specific procedures to obtain automatic consent to change to the Vehicle-Pool Method.
Even when all of these guidelines are followed by the taxpayer, its computations under the simplified method remain subject to verification by the IRS. Therefore, it is critical for you to discuss your current method of inventory valuation with our cpa nyc and how the Vehicle-Pool Method applies to you. Please call our nyc cpa office to arrange an appointment at your convenience.