2016 Year-End Dealership Checklist

Year-End Dealership Checklist and Important Tax Reminders

Click here to download the year-end dealership checklist2016 is drawing to a close, and a few things might have changed for your dealership. As you look forward to 2017, you might want to complete the following accounting, tax, payroll, and other tasks before you close your fiscal year.

Inventory

You must include a reasonable estimate of your LIFO adjustment on your December dealer financial statement in order to be in compliance with LIFO provisions.

Maximize your LIFO deduction by including in-transit units on your floorplan reconciliation.

Run the used vehicle inventory water report in order to calculate your used vehicle lower of cost or market adjustment for tax purposes.

Calculate interest assistance and advertising assistance received on units still in inventory at December 31, 2016. This income can be deferred to 2017 when the units are sold.

Perform a parts physical inventory, preferably by an outside firm. Compare and reconcile your parts physical inventory to the inventory in accounting and make necessary adjustments.

All individuals who are provided a demonstrator vehicle should sign a written demonstrator policy agreement and depending on the IRS approved calculation you use, the taxable amount for being provided a demonstrator should be included on the W-2.

Fixed Assets

If you have recently purchased, constructed or expanded your facilities, then it may be possible for you to accelerate the tax savings associated with these costs. A real estate Cost Segregation Study helps accelerate income tax depreciation deductions and generates significant cashflow savings for the dealership. Cost segregation is an IRS approved procedure for identifying and re-classifying capitalized amounts allocable to property and land improvements from building costs, which typically depreciate over 39 years. The tax savings for dealers have been outstanding.

Find out if you’re eligible to claim a first-year Sec. 179 deduction of up to $500,000 for fixed assets, such as equipment, software and leasehold improvements, or the following qualified real property improvement costs:

  • Certain improvements to interiors of leased nonresidential buildings
  • Certain restaurant buildings or improvements to such buildings
  • Certain improvements to interiors of retail buildings ‰ Take advantage of a 50% first-year bonus depreciation for qualified new assets (including software) that your business placed in service in 2016

A quick reminder to all dealers receiving manufacturer payments for facility upgrades: the IRS has looked extensively at several cases and examples of dealerships receiving assistant payments from the manufacturer, which is typically tied to new vehicles units ordered from the factory or new units sold. In all situations, the IRS concluded the payments received were ordinary income. These payments should not be netted against construction costs or associated expenses of the facility upgrade.

Accruals

Adjust real estate tax payable accounts to at least equal the total paid in 2016.

Digital

Print off your yearly website analytics and prepare your digital strategy for 2017.

Calculate ROI with third party marketers and make necessary changes.

Data Management

Make a clean break on January 1 with electronic storage for deal jackets and repair orders.

Taxes

Make sure W-9’s are up to date as the information will be critical to filing your 1099’s by the new due date of 1/31/2017.

Make sure form 8300 for cash payments exceeding $10,000 have been filed.

To find out how Brady Ware’s Dealership Services Team can help your dealership prosper, contact Sam Agresti at sagresti@bradyware.com or 614.384.8410.


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