Dealership Year-End Tax Checklist | 2025

The Basic Year-End Checklist For Dealerships

Tie up these loose ends before the new year begins. These are simple things you can do, and likely already have been doing, to make sure you are focusing on strategy rather than housekeeping tasks.

• Prepare all bank reconciliations
• Review and research outstanding items for potential year-end adjustments
• Report unclaimed property to state agencies
• Write off any uncollectible balances
• Record finance chargebacks in December
• Record the December LIFO estimate. Make sure to include any floorplan units in transit to help mitigate any LIFO recapture
• Write down used vehicles (probably a safe bet your used vehicles have taken a significant decrease in value over the past couple months)

These are all common items that can use a once over at year end.

The Tax-Planning Checklist For Dealers

These items are essential for tax planning purposes.

• Continue to maximize the 20% Qualified Business Income deduction is key to minimizing your taxes in 2025.
• Take advantage of all Bonus depreciation (only 60% in 2024) and Section 179 depreciation. Make sure you have a capitalization policy to expense minimal purchases to repairs and maintenance.
• With the increase in the standard deduction, your more common itemized deductions have lost value. Consider bunching deductions like charitable contributions. We’ve seen taxpayers doubling their donations to their favorite charities this year, so they get above the standard exemption- and forgoing next year’s gift.
• For businesses treated as partnerships or S corporations for tax purposes, consider any available state pass-through entity tax election.

Insider Tips For Best Reporting & Compliance Practices

We have just a few items of note on your reporting and compliance measures.

• All individuals who are given a demo vehicle should sign a written demonstrator policy agreement. Brady Ware can help you identify the best option because the IRS has approved four different methods.
• Travel expenses are deductible in full, but certain meal expenses are limited. Costs related to holiday parties, customer snacks, promotions, and on-site employee meals are not limited but should be posted to a separate account. In 2024, all restaurant business related meal expenses are back to 50% deductible.
• Include shareholder health insurance premiums paid and HSA contributions on W-2 for shareholders greater than 2%. Your payroll provider can help with this. Make sure to communicate with them prior to year-end that these adjustments will need to be included on the W-2s. The deduction for these items is then taken on the shareholders tax return.
• Review W-9s for 1099 reporting.
• Remember entertainment expenses are not deductible. This includes expenditures for amusement (ex. sporting events), recreation, and membership dues.
• Review Beneficial Ownership Information reporting requirements for required filings by January 1, 2025.  You can find more information about the reporting requirements in the link to an article about this topic on our website.

Finish The Year Strong

As always, a change in administration leads to some uncertainty in tax planning, consumer, and industry trends.  Brady Ware continues to monitor these developments and will highlight relevant issues as they arise.

Not sure if you’re meeting all the criteria? Talk with a Dealership Specialist today to find out how we can get you set up internally for success and guide you to accomplish your unique goals.