INDEX OF ARTICLES
MARCH, 1991 - DECEMBER, 2012
I.
COST ELIGIBILITY REQUIREMENT
II.
FINANCIAL STATEMENT REPORTING CONFORMITY REQUIREMENTS
III.
CONSENT REQUIREMENT … FORM 970 & LIFO ELECTION CONSIDERATIONS
IV.
BOOKS & RECORDS; ACCURACY-RELATED PENALTIES, ETC.
V.
CALCULATIONS
VI.
ITEM DEFINITION & POOLING
VII.
INCREMENT VALUATION METHODS
VIII. AUTOMOBILE DEALER LIFO APPLICATIONS
IX.
REPLACEMENT COST METHOD FOR VALUING PARTS INVENTORIES
X.
MANUFACTURERS & COMPONENTS-OF-COST METHODS
XI.
OTHER SPECIFIC BUSINESSES
XII.
IPIC (INVENTORY PRICE INDEX COMPUTATION) METHOD
XIII. PLANNING, PROJECTING & MANAGING YEAR-END INVENTORY LEVELS
XIV. LIFO RECAPTURE TAX & ENTITY CHANGES: SECTION 1363(d), C TO S, LLC, etc.
XV.
CHANGING METHODS OF ACCOUNTING FOR LIFO INVENTORIES
XVI. TERMINATING LIFO ELECTIONS
XVII. TIMELINES & PRACTICE GUIDES
XVIII. OTHER … HISTORICAL DEVELOPMENT OF LIFO, REPEAL PROPOSALS, etc.
XIX. FINDING LISTS
WILLARD J. DE FILIPPS, CPA
Willard J. De Filipps, CPA, PC
317 West Prospect Avenue
Mt. Prospect, Illinois 60056
Phone (847) 577-3977
Fax (847) 577-1073
www.defilipps.com
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INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 2
I.
COST ELIGIBILITY REQUIREMENT
Elimination of Trade Discounts (Floorplan Assistance Payments) and
Certain Advertising Fees & Expenses from Inventory Cost ........................................................................ 6-7
Treatment of Cash Discounts ............................................................................................................................ 7
Replacement Cost Method for Valuing Parts Inventories ................................................................................. 7
Rolling Average Cost Method .......................................................................................................................... 7
Section 263A Uniform Inventory Cost Capitalization (UNICAP) Rules .......................................................... 8
IRS Terminates LIFO Election Made for Some - But Not All - Costs that Make up Goods ............................ 8
II.
FINANCIAL STATEMENT REPORTING CONFORMITY REQUIREMENTS
General .............................................................................................................................................................. 9-10
Automobile Dealer Specific … Post-1996 ........................................................................................................ 10
Automobile Dealer Specific … Pre-1997 ......................................................................................................... 11
III.
CONSENT REQUIREMENT … FORM 970 & LIFO ELECTION CONSIDERATIONS ............................... 12
IV.
BOOKS & RECORDS; ACCURACY-RELATED PENALTIES, ETC.
Books & Records .............................................................................................................................................. 13
Accuracy-Related Penalties .............................................................................................................................. 13
V.
CALCULATIONS
General .............................................................................................................................................................. 14-15
Allocation of LIFO Reserve Balances by Franchise ......................................................................................... 15
Bargain Purchase Acquisitions of Inventory ..................................................................................................... 15
Combining LIFO Reserves in Section 381(a) Tax-Free Transfers .................................................................... 16
Combining Pools ............................................................................................................................................... 16
First Year Calculations ...................................................................................................................................... 16
Involuntary Conversions of LIFO Inventories .................................................................................................. 16
Negative LIFO Reserves ................................................................................................................................... 17
Rebasing Indexes .............................................................................................................................................. 17
Revaluing LIFO Inventory Layers When Accounting Method Changes Require Section 481(a) Adjustments ... 17
Sampling ........................................................................................................................................................... 17
Splitting Dollar-Value LIFO Pools ................................................................................................................... 18
Surveys .............................................................................................................................................................. 18
VI.
ITEM DEFINITION & POOLING .................................................................................................................... 19
VII.
INCREMENT VALUATION METHODS ........................................................................................................... 20
(continued)
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PAGE 3
VIII. AUTOMOBILE DEALER LIFO APPLICATIONS
Year-End Financial Statement Conformity Reporting Requirements ....................................................... 21
New Vehicle Inventories
Vehicle-Pool (Single, Combined Pool) Method … Rev. Proc. 2008-23 ..................................................... 21-22
Alternative LIFO Method … Rev. Proc. 97-36 ........................................................................................... 23
Alternative LIFO Method … Rev. Proc. 92-79 ........................................................................................... 23
New Item Lists … Definition, Analyses & Comparison With IRS Lists..................................................... 24-25
IRS Audit Activity … Post-1992 ................................................................................................................. 25
IRS Audit Activity … Prior to Alternative LIFO Method ........................................................................... 25
Used Vehicle Inventories
Vehicle-Pool (Single, Combined Pool) Method … Rev. Proc. 2008-23 ..................................................... 26
Used Vehicle Alternative LIFO Method … Rev. Proc. 2001-23 ................................................................. 26-27
Theory & Practice ........................................................................................................................................ 27
Form 970 Election Reporting for Used Vehicles ......................................................................................... 27
Terminating LIFO Elections for Used Vehicles .......................................................................................... 27
Used Vehicle Writedowns ........................................................................................................................... 28
Parts & Accessories Inventories
Replacement Cost Method for Valuing Parts Inventories............................................................................ 28
IPIC (Inventory Price Index Computation) Method, Inadvisability of IPIC for Auto Dealers ............... 28
IX.
REPLACEMENT COST METHOD FOR VALUING PARTS INVENTORIES ............................................... 29
X.
MANUFACTURERS & COMPONENTS-OF-COST METHODS ..................................................................... 30
XI.
OTHER SPECIFIC BUSINESS APPLICATIONS
Core Remanufacturers ....................................................................................................................................... 31
Furniture Manufacturers.................................................................................................................................... 31
Heavy Construction Equipment Dealers ........................................................................................................... 31
Jewelry Retailers & Wholesalers ...................................................................................................................... 31
Oil Refineries .................................................................................................................................................... 31
Other Misc. ....................................................................................................................................................... 31
Wineries/Vintners ............................................................................................................................................. 31
XII.
IPIC (INVENTORY PRICE INDEX COMPUTATION) METHOD .................................................................. 32-33
XIII. PLANNING, PROJECTING & MANAGING YEAR-END INVENTORY LEVELS
Cases & General................................................................................................................................................ 34
Dealership Planning for 2009 Year-End LIFO Inventories .............................................................................. 34
Planning & Projecting for Year-End LIFO Inventories .................................................................................... 35-36
Quick Year-End LIFO Estimates Based on One-Of-Each Item Category Inventory Mix ................................ 37
XIV. LIFO RECAPTURE TAX & ENTITY CHANGES: SECTION 1363(d), C TO S, LLC, etc.
Disregarded Entities, LLCs, etc. ....................................................................................................................... 38
C Corporation to S Corporation Status Conversions & Section 1363(d) Recapture ......................................... 38
Coggin Automotive Case ................................................................................................................................... 38
Entity/Group Restructurings ............................................................................................................................. 38
S Corps. & QSSSs (Qualified Subchapter S Subsidiaries) ................................................................................ 39
Recapture Relief Under Section 473 ................................................................................................................. 39
Other ................................................................................................................................................................ 39
(continued)
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INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 4
XV.
CHANGING METHODS OF ACCOUNTING FOR LIFO INVENTORIES (CAMs)
Changing Methods - General ............................................................................................................................ 40
Form 3115 Filings ............................................................................................................................................. 40
Current Revenue Procedures
Statistical Sampling … Rev. Proc. 2011-42 ................................................................................................ 41
Automatic CAMs … Rev. Proc. 2011-14 .................................................................................................... 41
IRS Advance Consent Required CAMs … Rev. Proc. 97-27 ...................................................................... 41
Superseded Revenue Procedures Relating to Changes in Accounting Methods (CAMs)
Rev. Proc. 2009-39 ...................................................................................................................................... 41
Rev. Proc. 2008-52 ...................................................................................................................................... 41
Rev. Proc. 2002-19 ...................................................................................................................................... 41
Rev. Proc. 2002-9 ........................................................................................................................................ 42
Rev. Proc. 99-49 .......................................................................................................................................... 42
Rev. Proc. 98-60 .......................................................................................................................................... 42
Rev. Proc. 97-37 .......................................................................................................................................... 42
Rev. Proc. 92-20 .......................................................................................................................................... 42
XVI. TERMINATING LIFO ELECTIONS .................................................................................................................. 43
XVII. TIMELINES & PRACTICE GUIDES
Timelines
General......................................................................................................................................................... 44
Other - Specific ............................................................................................................................................ 44
Practice Guides
Bargain Purchase Acquisitions of Inventory ............................................................................................... 44
Calculations ................................................................................................................................................. 44
Changes in LIFO (Accounting) Methods & Forms 3115 ............................................................................ 44
Components-of-Cost Method (for Manufacturers) ...................................................................................... 44
IPIC (BLS) Method … Use of External Inflation Indexes for LIFO Calculations ...................................... 45
LIFO Elections, Form 970 Filings & Checklists ......................................................................................... 45
LIFO Financial Statement Conformity Requirements ................................................................................. 45
LIFO Reserve Recapture Tax ...................................................................................................................... 45
Planning, Projecting & Managing Year-End Inventory Levels ................................................................... 46
Replacement Cost Method for Valuing Parts Inventories............................................................................ 46
Used Vehicles - Alternative LIFO Method (Rev. Proc. 2001-23) ............................................................... 46
XVIII. OTHER
Historical Development of LIFO ...................................................................................................................... 47
Congress Considers Repeal of LIFO Method & Efforts to Oppose Repeal of LIFO Method........................... 47
Contributing Authors ........................................................................................................................................ 48
Bibliographies & Lists of Suggested Further References ................................................................................. 48
(continued)
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INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 5
XIX. FINDING LISTS
Cases
Amity Leather Products ............................................................................................................................... 49
Ballou & Company, Inc. .............................................................................................................................. 49
Boecking Machinery, Inc. ............................................................................................................................ 49
Coggin Automotive Corp. ............................................................................................................................ 49
Consolidated Manufacturing, Inc. ............................................................................................................... 49
Hamilton Industries, Inc. ............................................................................................................................. 49
Huffman et al. v. Comm. .............................................................................................................................. 49
Illinois Cereal Mills vs. Comm. ....................................................................................................................... 49
Ingredient Technology Corp./Sucrest .......................................................................................................... 49
Insilco Corp. ................................................................................................................................................ 49
Kohler Co. And Subs.................................................................................................................................... 49
LaCrosse Footwear, Inc. ............................................................................................................................. 49
Mountain Sate Ford Truck Sales, Inc. ......................................................................................................... 49
Richardson, E. W. ........................................................................................................................................ 49
Wendle Ford Sales, Inc. ............................................................................................................................... 49
William Powell Co. ...................................................................................................................................... 49
IRS Documents & Publications
IRS Announcements .................................................................................................................................... 50
Audit Technique Guides ............................................................................................................................... 50
Automotive Alerts (IRS Motor Vehicle Technical Advisor) ....................................................................... 50
Chief Counsel Memoranda (CCMs) ............................................................................................................ 50
Coordinated Issue Papers (CIPs) ................................................................................................................. 50
Field Attorney Advice (FAAs) .................................................................................................................... 50
Field Service Advice (FSAs) Memoranda ................................................................................................... 51
General Counsel Memoranda (GCMs) ........................................................................................................ 52
Industry Specialization Program Appeals Settlement Guidelines................................................................ 52
Internal Revenue Service Legal Memoranda (ILMs) .................................................................................. 52
Letter Rulings (PLRs) - Including Technical Advice Memoranda (TAMs) ................................................ 52-53
Notices ......................................................................................................................................................... 54
Revenue Procedures..................................................................................................................................... 54-56
Revenue Rulings .......................................................................................................................................... 57
IRS Audit Activity For Auto Dealer LIFO Calculations ............................................................................. 57
* NOTE: To facilitate key word/subject finding:
Certain articles marked (*) are included more than once in the detailed topic/subject listings. Articles relating to
IRS Audit manuals, Guides, etc., and PRACTICE GUIDES (identified by PG) are included in the detailed
topic/subject listings and in the above FINDING LISTS. (Rev. January, 2013) G:\Group\Word\Lookout\LLIndexofArticles.docx
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INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 6
I.
COST ELIGIBILITY REQUIREMENT
ELIMINATION OF TRADE DISCOUNTS (FLOORPLAN ASSISTANCE PAYMENTS) AND
CERTAIN ADVERTISING FEES & EXPENSES FROM INVENTORY COST
Revaluing LIFO Inventories When CAMs Require Section 481(a) Adjustments*
Overview ....................................................................................................................... Mid-Year, 2012 ......... pg. 31
Procedures & Rules for Revaluing Dollar-Value (Opening) LIFO Inventories
Under Reg. Sec. 1.263A-7 ........................................................................................ Mid-Year, 2012 ......... pg. 34
Analysis of Reg. Sec. 1.263A-7 Computation Example ................................................ Mid-Year, 2012 ......... pg. 36
Case Study Applying Revaluation Requirements
Summary of CAM, Procedures & Benefits .............................................................. Mid-Year, 2012 ......... pg. 40
Supporting Schedules ............................................................................................... Mid-Year, 2012 ......... pg. 46
Sample Form 3115 Narrative ................................................................................... Mid-Year, 2012 ......... pg. 51
Sec. 263A CAMs & Sec. 481(a) Adjustments for LIFO Inventory Restatements* ............ Mid-Year, 2011 ......... pg. 8
Vendor Allowances for Defective Merchandise Should Be Reductions
of Inventory Cost Because They Are Similar to Trade Discounts (ILM 200945034) ... Mid-Year, 2010 ......... pg. 45
How Big Are Auto Dealers’ Trade Discounts? … Our Survey of Dealers’ Trade Discounts ....... Mid-Year, 2010 ......... pg. 50
Updated Procedures for Automatic Changes in LIFO Methods (Rev. Proc. 2008-52)*
Invoiced Advertising Association Costs for New Vehicle Retail Dealerships* ............ Year-End, 2008 ......... pg. 25
Concern Over Unofficial Answer from IRS on How Dealers on LIFO Should Be
Handling Trade Discounts (Update #7) ......................................................................... December, 2006 ........ pg. 2
Concerns over Some LIFO Comments in NADA’s 2006 Dealer Guide to
Federal Tax Issues Concerning Dealers on LIFO & Handling of Trade Discounts ..........September, 2006 ....... pg. 15
Treatment of Marketing Agreement Rebates as Trade Discounts … TAM 200605010 ........ September, 2006 ....... pg. 13
Purchase Price Adjustments, “Item” Determination & LIFO Cost Reductions
… TAM 200624066 ...................................................................................................... September, 2006 ....... pg. 13
Follow-up on … “CPAs Are Risking Their Dealers’ LIFO Elections
… And They May Not Even Be Aware of It” (Update #6) ........................................... December, 2005 ........ pg. 4
IRS Letter Approving Change in Method of Accounting for Ad Fees & Expenses............ September, 2005 ....... pg. 11
CPAs Are Risking Their Dealers’ LIFO Elections
… And They May Not Even Be Aware of It (Update #1) ............................................. March, 2005 .............. pg. 1
Still More on Trade Discounts (Update #2) ........................................................................ March, 2005 .............. pg. 1
Dealer Caught between Conflicting Opinions about
the Need to Change Accounting Methods for Trade Discounts..................................... March, 2005 .............. pg. 3
Changes in Accounting Methods … PART II .................................................................... September, 2004 ....... pg. 3
IRS National Office Letters Approving Advertising Fees & Expenses CAMs
Typical Example of IRS Change Letter with Comments & Explanations ............... September, 2004 ....... pg. 6
Advertising Fees Are Deductible as Ordinary and Necessary, Even Though
They Must Be Paid in Order to Acquire the Vehicles … LTR 9243010 .................. September, 2004 ....... pg. 12
GAAP Reporting Changes w/r/t Trade Discounts and/or
Certain Advertising Fees and Expenses by Publicly-Held Dealership Groups
In Accordance with Emerging Issue Task Force (EITF) Issue No. 02-16................ September, 2004 ....... pg. 14
CAMs to Eliminate Trade Discounts, etc. - Sample Letter .................................. PG ... March, 2004 .............. pg. 2
CAMs to Eliminate Trade Discounts, etc. (Update #1) ................................................. December, 2003 ........ pg. 1
CAMs to Eliminate Trade Discounts, etc. - Sample Letter ........................................... December, 2003 ........ pg. 4
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INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 7
I.
COST ELIGIBILITY REQUIREMENT (continued)
ELIMINATION OF TRADE DISCOUNTS (FLOORPLAN ASSISTANCE PAYMENTS) AND
CERTAIN ADVERTISING FEES & EXPENSES FROM INVENTORY COST (continued)
Changes in Accounting Methods … PART I ..................................................................... September, 2003 ....... pg. 3
Trade Discounts Must Be at “Net” - Not “Gross” - Invoice … Rev. Rul 84-41 ............ September, 2003 ....... pg. 6
The All Events & Economic Performance Tests … How Soon Can the
Tax Deduction Be Claimed? .................................................................................... September, 2003 ....... pg. 9
Financial vs. Tax Reporting … GAAP Implications for Trade Discounts
& Advertising Fees ................................................................................................... September, 2003 ....... pg. 11
Revaluing Dollar-Value (Opening) LIFO Inventories under Sec. 263A ....................... September, 2003 ....... pg. 16
Sec. 263A Revaluation Example … Reg. Sec. 1.263A-7(c)(2)(iv)(C) .......................... September, 2003 ....... pg. 18
Recommendations & Suggestions ................................................................................. September, 2003 ....... pg. 21
Practice Guide … A Trade Discount and Advertising Fees & Expenses
Change in Method Checklist .......................................................................... PG ... September, 2003 ....... pg. 22
Doing the Math … A Case Study
Section 481(a) Calculations for LIFO Pools & Inventory Recap .................................. September, 2003 ....... pg. 24
Cost Effectiveness - Benefit Analysis … JKL & ABC Dealership Groups ................... September, 2003 ....... pg. 27
Sample Letter to Dealership Explaining CAM Results ........................................ PG ... September, 2003 ....... pg. 28
Rev. Proc. 2002-9 … Volume-Related Trade Discounts .................................................... September, 2003 ....... pg. 31
At a Glance … IRS Filing Procedures to Follow in Making Automatic Change
in Method of Accounting, Filing Forms 3115 - Rev. Proc. 2002-9 ............................... September, 2003 ....... pg. 32
Form 3115 … Sample Narrative Texts
Trade Discount Changes in Methods under Rev. Proc. 2002-9 ............................ PG ... September, 2003 ....... pg. 33
Ad Fees & Expenses Changes in Methods under Rev. Proc. 97-27 ..................... PG ... September, 2003 ....... pg. 36
Trade Discount & Advertising Expense CAMs May Be the Answer
for Dealers Looking for Big, One-time Tax Write-Offs (Update #1) ............................ December, 2002 ........ pg. 1
More Background on These CAMs & Related Sec. 481(a) Adjustments (Update #2) ......... December, 2002 ........ pg. 1
TREATMENT OF CASH DISCOUNTS
IRS Requires Invoice-By-Invoice Analysis in Proposed Coordinated Issue Paper ............. September, 2003 ....... pg. 38
REPLACEMENT COST METHOD FOR VALUING PARTS INVENTORIES
See detail index for this topic at IX. REPLACEMENT COST METHOD FOR VALUING PARTS INVENTORIES.
ROLLING AVERAGE COST METHOD
IRS Now Permits Rolling Average Cost Method for LIFO Calculations …
Rev. Proc. 2008-43 ........................................................................................................ Year-End, 2008 ......... pg. 3
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INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 8
I.
COST ELIGIBILITY REQUIREMENT (continued)
SECTION 263A UNIFORM INVENTORY COST CAPITALIZATION (UNICAP) RULES
Sec. 263A CAMs & Sec. 481(a) Adjustments for LIFO Inventory Restatements .............. Mid-Year, 2011 ......... pg. 8
IRS TAM 200736026 … Guidance on Inventory Cost Capitalization Rules for Auto Dealers
Will Impact Dealers’ LIFO Calculations (Update #7) ................................................... December, 2007 ........ pg. 2
IRS TAM 200736026 … (Update #1)................................................................................. September, 2007 ....... pg. 1
IRS TERMINATES LIFO ELECTION MADE FOR SOME - BUT NOT ALL - COSTS THAT MAKE UP GOODS
IRS Terminates Consolidated Manufacturing, Inc.’s LIFO Election Made for
Some - But Not All - Costs that Make Up Goods * ....................................................... September, 1998 ....... pg. 4
Issues & Holdings .......................................................................................................... September, 1998 ....... pg. 5
IRS Challenges to Taxpayer’s LIFO Election ............................................................... September, 1998 ....... pg. 9
Taxpayer’s Seven Unsuccessful Defenses ..................................................................... September, 1998 ....... pg. 10
More About Cores & the Nature of the Business .......................................................... September, 1998 ....... pg. 15
Rev. Proc. 79-23 and IRS Terminations of LIFO Elections .......................................... September, 1998 ....... pg. 18
IRS Doesn’t Like “Components-of-Cost” ..................................................................... September, 1998 ....... pg. 20
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INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 9
II.
FINANCIAL STATEMENT REPORTING CONFORMITY REQUIREMENTS
CONFORMITY … GENERAL
Year-End Financial Statement Conformity Requirements for LIFO Inventories (See Note† below)
Basic LIFO Eligibility Requirements: “Conformity” Is Only One ................................ Year-End, 2012 ......... pg. 11
Form 970 Questions Regarding the Conformity Requirements ..................................... Year-End, 2012 ......... pg. 12
Where Did the “Conformity” Requirements Come From? ............................................ Year-End, 2012 ......... pg. 14
Conformity Requirements … There Are Many to Be Met Every Year ......................... Year-End, 2012 ......... pg. 15
Traditional Financial Statements in Annual Reports Issued by CPAs ........................... Year-End, 2012 ......... pg. 16
Automobile Dealership Year-End Statements Sent to
Manufacturers, Suppliers & Creditors* .................................................................... Year-End, 2012 ......... pg. 16
Revenue Ruling 97-42: Disclosure Guidelines for Certain Automobile Dealerships* .... Year-End, 2012 ......... pg. 17
Special Interpretations Clarified Only for Auto Dealers - All Other LIFO Users Beware ... Year-End, 2012 ......... pg. 19
Violations Cannot Be Corrected Once Year-End Financial Statements
Have Been Released (William Powell Company) .................................................... Year-End, 2012 ......... pg. 20
How Some Businesses Circumvent the LIFO Conformity Requirements ..................... Year-End, 2012 ......... pg. 20
Interim Reports .............................................................................................................. Year-End, 2012 ......... pg. 21
Affiliated & Consolidated Group Reporting Concerns: Insilco and Sec. 472(g) ........... Year-End, 2012 ......... pg. 21
Foreign Corporations & Operations Present Special Conformity Reporting Issues ...... Year-End, 2012 ......... pg. 22
IFRS Financial Statements & LIFO Conformity Requirements .................................... Year-End, 2012 ......... pg. 22
Concluding Cautions ..................................................................................................... Year-End, 2012 ......... pg. 23
Supplementary Information
Executive Summary ........................................................................................ PG ... Year-End, 2012 ......... pg. 24
Summary of Reg. Sec. 1.472-2(e) … LIFO Reporting Conformity Requirements .. Year-End, 2012 ......... pg. 26
Non-LIFO Disclosures as Supplementary Information in Year-End
Financial Statements … Selected Code & Regulations ...................................... Year-End, 2012 ......... pg. 27
Automobile Dealerships
Rev. Rul. 97-42 … Permissible Auto Dealer LIFO Reporting Variations in
Certain Factory/Manufacturer-Formatted Statements Issued
“for Credit Purposes” * ......................................................................... PG ... Year-End, 2012 ......... pg. 29
Conformity Flowchart for Calendar Year-End Dealerships*..................... PG ... Year-End, 2012 ......... pg. 30
Conformity Flowchart for Fiscal Year-End Dealerships* ......................... PG ... Year-End, 2012 ......... pg. 31
Foreign Corporations & Operations
Rev. Rul. 78-246 & the 30% Test or Threshold.................................................. Year-End, 2012 ......... pg. 32
LTR 200540005 .................................................................................................. Year-End, 2012 ......... pg. 32
LTR 201034004 .................................................................................................. Year-End, 2012 ......... pg. 33
IFRS Financial Statements & LIFO Conformity Requirements - FAA 20114702F ... Year-End, 2012 ......... pg. 34
†
NOTE: The December (or Year-End) issue of the LIFO Lookout for all years starting with Dec. 1999
through 2010 contained earlier versions of this basic information, updated as required. This article,
entitled “Year-End Financial Statement Conformity Requirements for LIFO Inventories,”
was revised and updated in the Year-End 2012 Edition of the LIFO Lookout
IFRS Statements Violated the LIFO Conformity Requirements … FAA 20114702F ........ Year-End, 2011 ......... pg. 8
Section 472 Code & Regulations Re: Non-LIFO Disclosures as Supplementary Information
in Year-End Financial Statements ................................................................................. Year-End, 2011 ......... pg. 12
.................................................................................. Year-End, 2010 ......... pg. 22
Non-LIFO Disclosures (in Supplementary Information to Financial Statements)
Receive IRS Approval in LTR 201034004 .................................................................... Year-End, 2010 ......... pg. 20
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INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 10
II.
FINANCIAL STATEMENT REPORTING CONFORMITY REQUIREMENTS (continued)
CONFORMITY … GENERAL (continued)
Conformity Requirement Is Not Violated by Foreign Parent Issuing
Non-LIFO Financial Statements Involving U.S. Subsidiaries … LTR 200540005 ....... September, 2005 ....... pg. 14
Financial Statement Conformity Requirements Where Foreign Corporations Are Involved …
The 30% Threshold Test … Rev. Rul. 78-246 .............................................................. September, 2005 ....... pg. 15
IRS Clarifies Conformity Requirement for Consolidated Group Members (Update #4) .... March, 2003 .............. pg. 1
Be Sure Year-End Financial Statements Satisfy
All of the LIFO Conformity Requirements.................................................................... December, 1998 ........ pg. 6
Conformity Requirements: The Ultimate LIFO Traps ....................................................... December, 1997 ........ pg. 3
LIFO Conformity Update: Year-End 1996 ........................................................................ December, 1996 ........ pg. 3
Conformity Requirements: Still the Ultimate LIFO Traps Year-End Update - 1995......... December, 1995 ........ pg. 3
What the District Court Said in the William Powell Decision............................................. December, 1993 ........ pg. 3
CONFORMITY … AUTOMOBILE DEALER-SPECIFIC … POST-1996
Dealership Year-End Reports to Manufacturers
Don’t Get Careless with Year-End Reports … Rev. Rul. 97-42.................................... Year-End, 2011 ......... pg. 14
Updated Conformity Flowcharts
Calendar Year Dealerships ....................................................................................... Year-End, 2011 ......... pg. 16
Fiscal Year Dealerships ............................................................................................ Year-End, 2011 ......... pg. 17
Update on LIFO Matters from the IRS Motor Vehicle Industry Specialist......................... December, 1999 ........ pg. 2
IRS Motor Vehicle Industry Specialist Comments
on Conformity & Used Vehicle LIFO * ........................................................................ December, 1998 ........ pg. 5
Medium- & Heavy-Duty Truck Dealers Get Relief for LIFO Conformity Violations........ September, 1998 ....... pg. 17
Rev. Proc. 98-46 … At A Glance .......................................................................... PG ... September, 1998 ....... pg. 26
Key Terms & Important Dates .............................................................................. ........ September, 1998 ....... pg. 27
California Gives Dealers a Pass on Conformity Penalty Payments to the IRS ................... June, 1998 ................. pg. 2
Auto Dealer Conformity: Countdown to May 31, 1998..................................................... March, 1998 .............. pg. 2
State Income Tax Consequences of Paying
the LIFO Conformity Penalty Tax to the IRS … State-by-State Responses .................. March, 1998 .............. pg. 4
Revenue Procedure 97-44 Penalty Tax for Conformity Violations
Additional Problem Areas & Unanswered Questions .................................................... December, 1997 ........ pg. 9
NADA’s Dealer Guide to the LIFO Conformity Settlement .......................................... December, 1997 ........ pg. 10
Some Generalizations & Advice for Dealing with Rev. Proc. 97-44............................. December, 1997 ........ pg. 12
Relief Finally Arrives for Auto Dealers with LIFO Conformity Violations........................ September, 1997 ....... pg. 3
Rev. Proc. 97-44: At A Glance ............................................................................. PG ... September, 1997 ....... pg. 4
Rev. Proc. 97-44: Key Terms & Important Dates ......................................................... September, 1997 ....... pg. 5
Rev. Rul. 97-42: Examples of Reporting Variations .................................................... September, 1997 ....... pg. 6
Rev. Proc. 97-44: Transmittal Memo for Penalty Payments......................................... September, 1997 ....... pg. 7
Some Questions in Need of Answers............................................................................. September, 1997 ....... pg. 10
Rev. Rul. 97-42 …What It Says: Defining Conformity Violations .............................. September, 1997 ....... pg. 13
Rev. Proc. 97-44 … What It Says: Procedures for Securing Relief.............................. September, 1997 ....... pg. 17
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INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 11
II.
FINANCIAL STATEMENT REPORTING CONFORMITY REQUIREMENTS (continued)
CONFORMITY … AUTOMOBILE DEALER-SPECIFIC … PRE-1997
Auto Dealer Financial Statement Conformity Violation: FSA 1999-973 .......................... June, 1999 ................. pg. 18
NADA’s December, 1995 Dealer Conformity Bulletin ...................................................... December, 1995 ........ pg. 9
“Guidance” From the IRS - A Cure Worse Than the Disease? ........................................... December, 1995 ........ pg. 12
Tax Notes Perspective on Conformity & Comments on Tax Notes Article......................... December, 1995 ........ pg. 14
Letter to Bill Archer - Why Congress Should Intervene ..................................................... December, 1995 ........ pg. 18
LIFO Elections Terminated by Recent LTRs ...................................................................... September, 1995 ....... pg. 4
Issues and Holdings in Letter Rulings 9535009 & 9535010 ......................................... September, 1995 ....... pg. 6
Why Congress or the Commissioner Should Intervene....................................................... September, 1995 ....... pg. 10
LIFO Conformity: Fiscal Year Dealerships (Flowchart) .......................................... PG ... September, 1995 ....... pg. 11
LIFO Conformity: Calendar Year Dealerships (Flowchart) ...................................... PG ... September, 1995 ....... pg. 12
A Letter to the Commissioner on Conformity ..................................................................... March, 1995 .............. pg. 3
You’ll Be Happier If You Don’t Read This ........................................................................ December, 1994 ........ pg. 3
Ten Arguments Worth Trying ............................................................................................. December, 1994 ........ pg. 5
A Catalog of Conformity Nightmares: Do You Really Pass All the Tests? ....................... December, 1994 ........ pg. 6
What Did the Treasury Really Mean in 1981? .................................................................... September, 1994 ....... pg. 11
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LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 12
III.
CONSENT REQUIREMENT … FORM 970 & LIFO ELECTION CONSIDERATIONS
IRS Revises Form 970 (Rev. Nov. 2012) (Update #3) ............................................................. Year-End, 2012 ......... pg. 1
Form 970 Questions Regarding the Conformity Requirements ............................................... Year-End, 2012 ......... pg. 12
Relief Granted for the Filing of Forms 970 for Restructuring Involving
New Single Member Limited Liability Company (SMLLC) Entity … LTR 201150025 ... Mid-Year, 2012 ......... pg. 7
Missed Form 970 Filings Require Extensions … LTR 201130010 ......................................... Year-End, 2011 ......... pg. 22
LTR 201136006 ......................................... Year-End, 2011 ......... pg. 22
Form 970 LIFO Election Late Filing Relief … Requesting Permission From the IRS
for an Extension of Time to File After the Regular Filing Due Date Has Been Missed …
Reasonable Extensions of the Time for Late Filings ..................................................... Year-End, 2011 ......... pg. 23
Loss of Status as a Disregarded Entity Creates Trap for
Making LIFO Election … LTR 201005026 ........................................................................ Mid-Year, 2010 ......... pg. 7
When in Doubt, File Form 970 for LLCs … LTR 200812010................................................. Mid-Year, 2009 ......... pg. 13
File Form 970 When a Partnership is Terminated by Section 708 … LTR 200914015 ........... Mid-Year, 2009 ......... pg. 14
Sample - 970 Use of Vehicle-Pool (Single, Combined Pool) Method* ................................... Spring, 2008 .............. pg. 50
New LIFO Election Form 970 Gets More than a Face-Lift ..................................................... March, 2006 .............. pg. 4
Sample - 970 Filing for Auto Dealerships Electing the Alternative LIFO Method* ...........PG ...March, 2006 .............. pg. 14
Form 970 Is About to Get a Real Face-Lift (Update #3) .......................................................... December, 2005 ........ pg. 1
IRS Allows Late Filing of Forms 970 in Complicated Auto Dealership
Reorganization Situation … LTR 200522008 .................................................................... September, 2005 ....... pg. 5
Form 970 Gets a Facelift ......................................................................................................... December, 2001 ........ pg. 4
Forms 970 and 3115 … Selected Recent Happenings *........................................................... March, 2000 .............. pg. 10
Conditions for Obtaining Permission to Make and File “Late” Elections ........................... March, 2000 .............. pg. 11
IRS Terminates Consolidated Manufacturing, Inc.’s LIFO Election Made for
Some - But Not All - Costs that Make Up Goods * ............................................................ September, 1998 ....... pg. 4
Issues & Holdings ............................................................................................................... September, 1998 ....... pg. 5
IRS Challenges to Taxpayer’s LIFO Election ..................................................................... September, 1998 ....... pg. 9
Taxpayer’s Seven Unsuccessful Defenses .......................................................................... September, 1998 ....... pg. 10
More About Cores & the Nature of the Business ................................................................ September, 1998 ....... pg. 15
Rev. Proc. 79-23 and IRS Terminations of LIFO Elections ................................................ September, 1998 ....... pg. 18
IRS Doesn’t Like “Components-of-Cost” ........................................................................... September, 1998 ....... pg. 20
Used Vehicle LIFO Election Tax Return Reporting Proforma Package * ...................... PG ... March, 1996 .............. pg. 21
Form 970 Sample With Proforma Attachments * ........................................................... PG ... March, 1996 .............. pg. 22
Comments & Reminders Checklist * .............................................................................. PG ... March, 1996 .............. pg. 26
Evaluating a LIFO Election - Basic Considerations ........................................................ PG ... December, 1994 ........ pg. 18
Form 970: How Not to Elect LIFO … LTR 9515001 ............................................................. June, 1995 ................. pg. 14
The LIFO Taxpayer’s “Bill of Rights:” Rev. Proc. 79-23 ........................................................ September, 1991 ....... pg. 7
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LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 13
IV.
BOOKS & RECORDS; ACCURACY-RELATED PENALTIES, ETC.
BOOKS & RECORDS
Adequate Books & Records and Record Retention Requirements for LIFO Inventories ... Year-End, 2010 ......... pg. 24
Analysis of R.P. 98-25 Electronic Recordkeeping Requirements for LIFO Inventories ..... Year-End, 2010 ......... pg. 28
Jewelry Retailer’s LIFO Calculations Lose Their Glitter … Turn Precious Gem
Inventory to Paste* - Adequate Recordkeeping for LIFO Purposes .............................. September, 1999 ....... pg. 6
When Are Books & Records (In)Adequate to Support LIFO Calculations? ....................... September, 1999 ....... pg. 10
Protecting Your Client’s Books and Records ...................................................................... March, 1995 .............. pg. 18
Sample Letter Re: Missing LIFO Workpapers for Prior Years,
Loss/Destruction of Books & Records, Request for LIFO Calculations ......... PG ... March, 1995 .............. pg. 19
Tax Court Terminates LIFO Election Due to Inadequate Books and Records:
Boecking Machinery, Inc.* ............................................................................................ December, 1992 ........ pg. 4
Books & Records, Closed Years and Adjusting Prior Year Indexes ................................... September, 1991 ....... pg. 10
ACCURACY-RELATED PENALTIES
Boecking Machinery, Inc. … Tax Court Terminates LIFO Election Due
to Inadequate Books & Records* .................................................................................. December, 1992 ........ pg. 16
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 14
V.
CALCULATIONS
GENERAL
Appeals Court Affirms LIFO Calculation Disaster for Huffman Automobile Dealerships*.. Spring, 2008 .............. pg. 2
The Importance of “Item” Definition & Some LIFO Landmark Cases
Some Background Basics* ............................................................................................ March, 2007 .............. pg. 20
Is Direct Labor a Separate Item in Components-of-Cost Applications? ........................ March, 2007 .............. pg. 21
Wendle Ford Sales, Inc. … Factoring the Effects of (Major) Technological Changes
Out of LIFO Indexes ................................................................................................ March, 2007 .............. pg. 21
Amity Leather Products … Factoring the Effects of Change in Product Mix &
Different Production Locations Out of LIFO Indexes .............................................. March, 2007 .............. pg. 23
Hamilton Industries, Inc. … Factoring the Results of Bargain Purchases of Inventory
Out of LIFO Indexes ................................................................................................ March, 2007 .............. pg. 24
The IRS Adjusts Decades of “Errors” in Link-Chain LIFO Calculations …
Huffman et al. v. Comm. ................................................................................................ June, 2006 ................. pg. 7
In Huffman, Even the Tax Court Became Confused in Doing Link-Chain LIFO Calculations . June, 2006 ................. pg. 22
Dollar-Value Method … The Technicalities ................................................................. June, 2006 ................. pg. 29
Step-by-Step Link-Chain Basics in Words .................................................................... June, 2006 ................. pg. 30
Step-by-Step Worksheet for Link-Chain Calculations .................................................. June, 2006 ................. pg. 31
“It’s Simple Math” … Proving Yearly Changes in LIFO Reserves............................... June, 2006 ................. pg. 32
Creating LIFO Layer Histories … From Limited Information ........................................... September, 2005 ....... pg. 20
Confessions of LIFO Link-Chain Enthusiast … 30 Years Later* ....................................... March, 2005 .............. pg. 32
How LIFO Works (for Auto Dealers) - Reprint of Feb. 1975 Article by W. J. De Filipps)*.. March, 2005 .............. pg. 33
Calculations - Why LIFO Reserves Change the Way They Do ................................. PG ... December, 2004 ........ pg. 23
Good News for Dealers Who’ve Stayed With Their Used Vehicle LIFO Elections
Through a Few Years of Deflation … They Are Finally Rewarded by Inflation …
and Big LIFO Reserve Increases * ................................................................................ June, 2004 ................. pg. 3
At A Glance … Four Case Study Pools .................................................................... June, 2004 ................. pg. 7
Detail Pool Computations ........................................................................................ June, 2004 ................. pg. 8
LIFO Practices Guide Checklists
“Hot Spots” in LIFO Inventory Situations ............................................................ PG ... June, 2003 ................. pg. 5
LIFO Reserve Review Procedures ........................................................................ PG ... June, 2003 ................. pg. 7
Protecting Against LIFO Malpractice Exposure ................................................... PG ... June, 2003 ................. pg. 8
Why LIFO Reserves Go Up ... Even Though Inventory Levels Go Down
... & Despite Rebasing Indexes to 1.000 In Between* ................................................... September, 2001 ....... pg. 9
Field Service Advice Provides Interesting Insights into IRS Thinking on LIFO Issues ..... June, 1999 ................. pg. 12
FSAs … At A Glance: Summary of LIFO-Related Field Service Advice ........... PG ... June, 1999 ................. pg. 14
Sale of Excess Capacity Inventory Does Not Require “Vertical Slice”
Faster LIFO Recapture (LTR 199920001)..................................................................... June, 1999 ................. pg. 4
IRS Can’t Prevent Use of Dollar-Value LIFO Method for Specifically Identifiable Goods
1992 FSA Allows DVM & Tells Agents How to Restrict Benefits (FSA 1998-152) ... September, 1998 ....... pg. 22
What is Field Service Advice? ................................................................................. September, 1998 ....... pg. 23
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LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 15
V.
CALCULATIONS (continued)
GENERAL (continued)
S Elections, QSSSs & “Almost Too Good to Be True” LIFO Results ................................ March, 1998 .............. pg. 25
Changes in Heavy-Truck & Equipment Discount Pricing (Update #6) .............................. December, 1996 ........ pg. 3
The Tax Court’s Primer on LIFO Inventories * ................................................................. September, 1996 ....... pg. 8
“Visualizing” How Dollar Value LIFO Works * ............................................................... September, 1996 ....... pg. 10
Summary of Methods for Pricing Dollar Value LIFO Pools............................................... June, 1996 ................. pg. 8
LTR 9448004: Leased Machinery Can Be Included in LIFO Inventory by
Heavy Construction Equipment Dealer * ...................................................................... December, 1994 ........ pg. 24
Why Do Some LIFO Reserves Go Up Even Though Inventory Levels Go Down? ........... March, 1992 .............. pg. 3
Theory, Practice & IRS Audit Issues: What’s Going On Out There? * ............................. September, 1991 ....... pg. 3
ALLOCATION OF LIFO RESERVE BALANCES BY FRANCHISE
Allocating the Change in a LIFO Reserve Among Several Group Members - A Case Study ...... Year-End, 2010 ......... pg. 30
Allocation of LIFO Reserve Balances by Franchise in Various Manufacturers’
Year-End Financial Statements...................................................................................... June, 2005 ................. pg. 2
Case Study - Detailed Explanation & Supporting Schedules ........................................ June, 2005 ................. pg. 4
BARGAIN PURCHASE ACQUISITIONS OF INVENTORY
Determination of Inventory Fair Market Value in Lump Sum Acquisition Situations
… Rev. Proc. 2003-51 ................................................................................................... June, 2003 ................. pg. 2
Bargain Purchase Inventory Escapes Section 481(a) Adjustment ... FSA 200121022 ....... September, 2001 ....... pg. 15
LIFO Can’t Be Used to Defer Bargain Purchase Gains in Inventory
LaCrosse Footwear Finally Reconciled with Earlier Cases …
No Basis Step-Up for Bargain Purchase Windfall ................................................... December, 1999 ........ pg. 4
At A Glance … The Triple Play: Hamilton, Kohler & LaCrosse ........................ PG ... December, 1999 ........ pg. 5
Checklist of Considerations in Evaluating Exposure ..................................................... December, 1999 ........ pg. 9
Field Service Advice 1999-909 Provides Insight into IRS Thinking .................................. June, 1999 ................. pg. 18
Field Service Advice 1999-1121 Provides Insight into IRS Thinking ............................... June, 1999 ................. pg. 19
LIFO & Bargain Purchase Inventories
Kohler & LaCrosse Footwear … Updated with an Unexpected Windfall .................... June, 1998 ................. pg. 3
LaCrosse Footwear, Inc. Denied Use of LIFO for Bargain Purchases ............................... June, 1997 ................. pg. 14
Pre-1996 LIFO Bargain Purchase Cases: Hamilton, Kohler, et. al. ................................... June, 1997 ................. pg. 21
Considerations in Evaluating Exposure in Bargain Purchase Situations .................... PG ... June, 1997 ................. pg. 22
Kohler Co. And Subs: Another IRS Victory/Taxpayer Defeat ........................................... March, 1996 .............. pg. 3
IRS Coordinated Issue Paper (Sept. 1995) … Hamilton Gets Stronger .............................. September, 1995 ....... pg. 22
LTR 9446003: Separate Pool Required for Sec. 351 Transfer of Discount Inventories ..... December, 1994 ........ pg. 24
Hamilton Industries: A New LIFO Nightmare .................................................................. December, 1991 ........ pg. 4
Son of Hamilton: IRS Announcement 91-173 ................................................................... December, 1991 ........ pg. 4
What the Tax Court Said in Hamilton Industries ................................................................ December, 1991 ........ pg. 5
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LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 16
V.
CALCULATIONS (continued)
COMBINING LIFO RESERVES IN SECTION 381(a) TAX-FREE TRANSFERS
Combining LIFO Inventories in Sec. 381(a) Tax-Free Transfers ....................................... Year-End, 2011 ......... pg. 24
COMBINING POOLS
Three Case Studies … Combining New Vehicle LIFO Pools under Rev. Proc. 2008-23*
Three Case Studies … Combining New Vehicle LIFO Pools (Update #7) ................... Mid-Year, 2009 ......... pg. 4
#1 - Adjusting for Different Base Years ........................................................................ Mid-Year, 2009 ......... pg. 36
#2 - An Unexpected, Pleasant Surprise.......................................................................... Mid-Year, 2009 ......... pg. 42
#3 - Example of the Inadvisability of Changing to the Vehicle-Pool Method for 2007 ... Mid-Year, 2009 ......... pg. 48
IRS Chief Counsel Guidance on Combining LIFO Pools for New Vehicles*
Overview & Analysis of Chief Counsel Memo (CCM) 200825044 .............................. Year-End, 2008 ......... pg. 33
Step-by-Step Analysis of CCM Examples
Example 1 … Combining LIFO Pools Having the Same Base Year ....................... Year-End, 2008 ......... pg. 38
Example 2 … Combining LIFO Pools Having Different Base Years ...................... Year-End, 2008 ......... pg. 40
An Alternative Approach, Reversing the Sequence of Calculations
Used to Combine the Pools ...................................................................................... Year-End, 2008 ......... pg. 44
Detail Computations of Results Obtained if Sequence of Calculations Is Reversed
CCM Example 1 … Same Base Years ..................................................................... Year-End, 2008 ......... pg. 45
CCM Example 2 … Different Base Years ............................................................... Year-End, 2008 ......... pg. 46
It Really Makes a Difference … A Real World Case Study .......................................... Year-End, 2008 ......... pg. 47
Combining LIFO Pools that Have the Same Base Years … A Case Study with
Letter of Explanation & Supporting Schedules ............................................................. September, 2006 ....... pg. 2
Combining LIFO Pools with Different Base Years in Merger, Q-Sub
& Other Situations … Technicalities & Case Study ...................................................... March, 2005 .............. pg. 6
At a Glance … Outline of the Dollar-Value LIFO Regs ...................................... PG ... March, 2005 .............. pg. 7
Analysis of the Limited Guidance from the Regulations ............................................... March, 2005 .............. pg. 8
Some Changes to Alternative LIFO Method in 1992 Raised the Problem .................... March, 2005 .............. pg. 12
Case Study - Detailed Explanation & Supporting Schedules ........................................ March, 2005 .............. pg. 14
Combining Different Vintage LIFO Pools: Even the AICPA Makes Mistakes ................. June, 1994 ................. pg. 6
Combining Multiple LIFO Pools with Differing Base Years
and “Disappearing” Base Dollars .................................................................................. March, 1993 .............. pg. 10
FIRST YEAR CALCULATIONS
See V. CALCULATIONS - BARGAIN PURCHASE ACQUISITIONS OF INVENTORY
and VI. INCREMENT VALUATION METHODS
INVOLUNTARY CONVERSIONS OF LIFO INVENTORIES
Deferring “Gain” on Involuntary Conversions of LIFO Inventories … TAM 201111004 . Mid-Year, 2011 ......... pg. 10
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INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 17
V.
CALCULATIONS (continued)
NEGATIVE LIFO RESERVES
Strange, But Explainable, Results from the Wacky World of Negative LIFO Reserves ... December, 1998 ........ pg. 14
REBASING INDEXES
Rebasing Indexes to 1.000 after Changes in LIFO Methods ............................................... September, 2007 ....... pg. 2
Rebasing LIFO Indexes to 1.000 in Connection with LIFO Method Changes* ................. September, 2001 ....... pg. 5
Rebasing Indexes to 1.000… An Expanded Example Involving Dual Indexes,
Splitting a Pool and Adding Demonstrator Vehicles ..................................................... March, 1993 .............. pg. 8
Another Rebasing Example - With Proofs:
Why LIFO Reserves Go Up Even Though Inventory Levels Go Down
and Despite Rebasing Indexes To 1.000 In Between ............................................... June, 1993 ................. pg. 6
Rebasing Prior Years’ LIFO Indexes to 1.000 .................................................................... December, 1992 ........ pg. 14
See also Case Studies on Combining Pools under Rev. Proc. 2008-23.
REVALUING LIFO INVENTORY LAYERS WHEN ACCOUNTING METHOD CHANGES REQUIRE SECTION
481(a) ADJUSTMENTS
Revaluing LIFO Inventories When CAMs Require Section 481(a) Adjustments*
Overview ....................................................................................................................... Mid-Year, 2012 ......... pg. 31
Procedures & Rules for Revaluing Dollar-Value (Opening) LIFO Inventories
Under Reg. Sec. 1.263A-7........................................................................................ Mid-Year, 2012 ......... pg. 34
Analysis of Reg. Sec. 1.263A-7 Computation Example ................................................ Mid-Year, 2012 ......... pg. 36
Case Study Applying Revaluation Requirements
Summary of CAM, Procedures & Benefits .............................................................. Mid-Year, 2012 ......... pg. 40
Supporting Schedules ............................................................................................... Mid-Year, 2012 ......... pg. 46
Sample Form 3115 Narrative ................................................................................... Mid-Year, 2012 ......... pg. 51
Sec. 263A CAMs & Sec. 481(a) Adjustments for LIFO Inventory Restatements* ............ Mid-Year, 2011 ......... pg. 8
SAMPLING
Rev. Proc. 2011-42 Provides Only General Guidance on Sampling Procedures ................ Year-End, 2011 ......... pg. 27
Coordinated Issue Paper (June 1995) on Dollar-Value LIFO …
Segment of Inventory Excluded from the Computation of the LIFO Index .................. Year-End, 2011 ......... pg. 42
Sampling Documentation Report Describing Statistical Sampling Procedures .................. Year-End, 2011 ......... pg. 44
Sampling and LIFO Inventories (Update #9) ...................................................................... Year-End, 2010 ......... pg. 4
Sampling and LIFO Inventories: New ISP Paper (June, 1995) .......................................... September, 1995 ....... pg. 20
Statistical Sampling and LIFO Inventory Applications ...................................................... March, 1995 .............. pg. 6
Sampling Documentation Report ........................................................................................ March, 1995 .............. pg. 7
Sampling Shortcuts: Don’t Even Think About Trying These ............................................ September, 1994 ....... pg. 16
See also VI. ITEM DEFINITION.
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INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 18
V.
CALCULATIONS (continued)
SPLITTING DOLLAR-VALUE LIFO POOLS
Procedures, Techniques & Refinements for Splitting Dollar-Value LIFO Pools ............... Mid-Year, 2011 ......... pg. 18
Application to Auto Dealerships Having Their Franchises Terminated (ILM 200935024)* .... Mid-Year, 2011 ......... pg. 31
SURVEYS
Dealership New Vehicle Inflation Indexes for 2011 & Other Observations ....................... Mid-Year, 2012 ......... pg. 6
Our Survey of 2008-2011 Dealers’ Inventory & LIFO Reserve Balances
Survey Comments & Discussion ................................................................................... Mid-Year, 2012 ......... pg. 24
Exhibits .......................................................................................................................... Mid-Year, 2012 ......... pg. 26
How Big Are Auto Dealers’ LIFO Reserves? … Our Survey of Dealers’ LIFO Reserves .... Mid-Year, 2010 ......... pg. 16
How Big Are Auto Dealers’ Trade Discounts? … Our Survey of Dealers’ Trade Discounts ... Mid-Year, 2010 ......... pg. 50
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LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 19
VI.
ITEM DEFINITION & POOLING
LIFO Landmark Cases Establishing the Narrow “Item” Definition Concept for Dollar-Value
LIFO Inventory Purposes .................................................................................................... Year-End, 2010 ......... pg. 41
IRS Rejects Manufacturers’ “Item” & “Product Group” Definitions
That Do Not Clearly Reflect Income … TAM 200735020* ............................................... Mid-Year, 2009 ......... pg. 16
IRS Rejects Oil Refinery’s “Item” Definitions That Are Too Broad
and Do Not Clearly Reflect Income … FAA 20080401F* ................................................. Mid-Year, 2009 ......... pg. 28
Updated Procedures for Automatic Changes in LIFO Methods (Rev. Proc. 2008-52)*
Changes to Dollar-Value Pools of Manufacturers*............................................................. Year-End, 2008 ......... pg. 32
The Importance of “Item” Definition & Some LIFO Landmark Cases
Some Background Basics* .................................................................................................. March, 2007 .............. pg. 20
Is Direct Labor a Separate Item in Components-of-Cost Applications? ............................. March, 2007 .............. pg. 21
Wendle Ford Sales, Inc. … Factoring the Effects of (Major) Technological Changes
Out of LIFO Indexes ...................................................................................................... March, 2007 .............. pg. 21
Amity Leather Products … Factoring the Effects of Change in Product Mix &
Different Production Locations Out of LIFO Indexes ................................................... March, 2007 .............. pg. 23
Hamilton Industries, Inc. … Factoring the Results of Bargain Purchases of Inventory
Out of LIFO Indexes ...................................................................................................... March, 2007 .............. pg. 24
LTR 200624066: Purchase Price Adjustments, “Item” Determination & LIFO Cost Reductions.. September, 2006 ....... pg. 13
FSA 1999-627: Wholesaler & Retailer Item Definition and Calculation Problems * .............. June, 1999 ................. pg. 17
FSA 1999-700: Item Definition for Auto Dealer (Pre- Rev. Proc. 92-79) * ........................... June, 1999 ................. pg. 17
FSA 1999-997: Item Definition for Auto Dealer (Pre- Rev. Proc. 92-79) * ........................... June, 1999 ................. pg. 18
E. W. Richardson: LIFO Problems for Auto Dealer Changing Item Definitions
Three LIFO Method Issues … All Fall Down … T.C. Memo 1996-368 ............................ September, 1996 ....... pg. 3
Item Definition .................................................................................................................... September, 1996 ....... pg. 7
The Tax Court’s Primer on LIFO Inventories * .................................................................. September, 1996 ....... pg. 8
“Visualizing” How Dollar Value LIFO Works * ................................................................ September, 1996 ....... pg. 10
What the Tax Court Said About Disputed LIFO Change Issues * ...................................... September, 1996 ....... pg. 12
Accounting Methods, Changes & Approval Disputes (Flowchart) * ......................... PG ... September, 1996 ....... pg. 16
E. W. Richardson - Tax Court Docket No. 27308-92.......................................................... June, 1996 ................. pg. 16
What the IRS Didn’t Like ................................................................................................... June, 1996 ................. pg. 17
Item Definitions … All Over the Place ............................................................................... June, 1996 ................. pg. 19
Taxpayer’s Link-Chain Methodology ................................................................................. June, 1996 ................. pg. 20
Mustangs & Wranglers - Items & Pools ............................................................................. June, 1996 ................. pg. 22
LTR 9445001:
Change in Item Definition Received Cut-Off Method Protection * ........... December, 1994 ........ pg. 24
What Is An Item? Does Anybody Know? ................................................................................ September, 1991 ....... pg. 8
See also V. CALCULATIONS - BARGAIN PURCHASE ACQUISITIONS OF INVENTORY.
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INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 20
VII.
INCREMENT VALUATION METHODS
Updated Procedures for Automatic Changes in LIFO Methods (Rev. Proc. 2008-52)*
Determining Current-Year Cost* ........................................................................................ Year-End, 2008 ......... pg. 27
IRS Now Permits Rolling Average Cost Method for LIFO Calculations …
Rev. Proc. 2008-43 .............................................................................................................. Year-End, 2008 ......... pg. 3
Appeals Court Affirms LIFO Calculation Disaster for Huffman Automobile Dealerships* ... Spring, 2008 .............. pg. 2
The IRS Adjusts Decades of “Errors” in Link-Chain LIFO Calculations …
Huffman et al. v. Comm....................................................................................................... June, 2006 ................. pg. 7
IRS Disallows Use of Dual Index Method for IPIC LIFO Calculations
And Teaches a Few Other Lessons re: Form 3115 Disclosures * ...................................... March, 2004 .............. pg. 5
IRS Publishes Appeals Settlement Guidelines on for LIFO Cases
Involving Dual Index Methods ........................................................................................... September, 2002 ....... pg. 16
Comments from the Guidelines on Short-Cut & Turnover Methods .................................. September, 2002 ....... pg. 19
Why Do Taxpayers Want to Use Dual Indexes? ................................................................. September, 2002 ....... pg. 20
Dollar-Value LIFO Methods … Technicalities ................................................................... September, 2002 ....... pg. 22
Rev. Proc. 97-37: Current Year Cost Determinations * ..................................................... September, 1997 ....... pg. 26
Earliest Acquisitions Method for Valuing Increments (Sept., 1995 & Sept., 1994) ................ June, 1996 ................. pg. 10
Final IRS Issue Paper Limits Use of Dual Indexes ............................................................. June, 1996 ................. pg. 10
Summary of Procedures ...................................................................................................... June, 1996 ................. pg. 11
Comparison of LIFO Reserve Results................................................................................. June, 1996 ................. pg. 13
LTR 9444002: Valuing Increments where CPI Method Is Used ........................................... December, 1994 ........ pg. 24
Earliest Acquisitions Method for Valuing Increments - ISP Update (Sept., 1994) .................. September, 1994 ....... pg. 18
Should A Start-Up Business Elect LIFO in its First Year? ...................................................... March, 1994 .............. pg. 10
Dual Index Approaches and Procedures................................................................................... September, 1993 ....... pg. 8
Dual Index Start-Up Situation Example .............................................................................. September, 1993 ....... pg. 11
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INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 21
VIII. AUTOMOBILE DEALERS LIFO APPLICATIONS
YEAR-END FINANCIAL STATEMENT CONFORMITY REPORTING REQUIREMENTS
Automobile Dealership Year-End Statements Sent to
Manufacturers, Suppliers & Creditors* ......................................................................... Year-End, 2012 ......... pg. 16
Revenue Ruling 97-42
Disclosure Guidelines for Certain Automobile Dealerships* ........................................ Year-End, 2012 ......... pg. 17
Permissible Auto Dealer LIFO Reporting Variations in Certain Factory/
Manufacturer-Formatted Statements Issued “for Credit Purposes” *.............. PG ... Year-End, 2012 ......... pg. 29
Conformity Flowchart for Calendar Year-End Dealerships* ..................................... PG ... Year-End, 2012 ......... pg. 30
Conformity Flowchart for Fiscal Year-End Dealerships* .......................................... PG ... Year-End, 2012 ......... pg. 31
NEW VEHICLE INVENTORIES
Vehicle-Pool (Single, Combined Pool) Method … Rev. Proc. 2008-23
Sample Form 3115 Narrative Statement for 2009 Change to the Vehicle-Pool Method* ... Year-End, 2009 ......... pg. 62
Three Case Studies … Combining New Vehicle LIFO Pools* … (Update #7) ............ Mid-Year, 2009 ......... pg. 4
#1 - Adjusting for Different Base Years ................................................................... Mid-Year, 2009 ......... pg. 36
#2 - An Unexpected, Pleasant Surprise .................................................................... Mid-Year, 2009 ......... pg. 42
#3 - Example of the Inadvisability of Changing to the Vehicle-Pool Method for 2007 . Mid-Year, 2009 ......... pg. 48
Updated Procedures for Automatic Changes in LIFO Methods (Rev. Proc. 2008-52)*
Changes to the Vehicle-Pool Method* ..................................................................... Year-End, 2008 ......... pg. 31
IRS Chief Counsel Guidance on Combining LIFO Pools for New Vehicles*
Overview & Analysis of Chief Counsel Memo (CCM) 200825044 ........................ Year-End, 2008 ......... pg. 33
Step-by-Step Analysis of CCM Examples
Example 1 … Combining LIFO Pools Having the Same Base Year .................. Year-End, 2008 ......... pg. 38
Example 2 … Combining LIFO Pools Having Different Base Years................. Year-End, 2008 ......... pg. 40
An Alternative Approach, Reversing the Sequence of Calculations
Used to Combine the Pools ................................................................................. Year-End, 2008 ......... pg. 44
Detail Computations of Results Obtained if Sequence of Calculations Is Reversed
CCM Example 1 … Same Base Years................................................................ Year-End, 2008 ......... pg. 45
CCM Example 2 … Different Base Years .......................................................... Year-End, 2008 ......... pg. 46
It Really Makes a Difference … A Real World Case Study .................................... Year-End, 2008 ......... pg. 47
Sample - 3115 Narrative Statement Explaining 2008 Pooling Change* ....................... Year-End, 2008 ......... pg. 62
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 22
VIII. AUTOMOBILE DEALERS LIFO APPLICATIONS (continued)
NEW VEHICLE INVENTORIES (continued)
Vehicle-Pool (Single, Combined Pool) Method … Rev. Proc. 2008-23 (continued)
IRS Approves Single, Combined LIFO Pool Method for New Vehicles
Evaluation of the Single Pool Method ...................................................................... Spring, 2008 .............. pg. 4
Detail Table of Contents........................................................................................... Spring, 2008 .............. pg. 5
Executive Summary ................................................................................................. Spring, 2008 .............. pg. 7
Sample Letter to Dealerships ................................................................................... Spring, 2008 .............. pg. 9
Quick Answer Guide & Deadlines ........................................................................... Spring, 2008 .............. pg. 10
Technical Analysis & Comments ............................................................................. Spring, 2008 .............. pg. 12
Changing on an Amended Return for 2007 .............................................................. Spring, 2008 .............. pg. 17
The Background / Back Story .................................................................................. Spring, 2008 .............. pg. 18
Technical Requirements & Computations
Combining LIFO Pools with the Same Base Date for Each Pool............................. Spring, 2008 .............. pg. 20
Combining LIFO Pools with the Different Base Dates for Each Pool ..................... Spring, 2008 .............. pg. 21
Rebasing Indexes to 1.0000...................................................................................... Spring, 2008 .............. pg. 22
Analysis of Rebasing Example in Regulations......................................................... Spring, 2008 .............. pg. 23
Should a Dealership Make the Change for 2007… or, Should It Just Wait Until 2008?
Step-by-Step Evaluation Approach ......................................................................... Spring, 2008 .............. pg. 28
Sample Worksheets .................................................................................................. Spring, 2008 .............. pg. 32
Case Studies Comparing Results for 2007 .................................................................... Spring, 2008 .............. pg. 36
Sample Proformas
Form 970 … for Initial LIFO Elections*.................................................................. Spring, 2008 .............. pg. 50
Form 3115 … for Changing to a Single Pool* ......................................................... Spring, 2008 .............. pg. 54
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 23
VIII. AUTOMOBILE DEALERS LIFO APPLICATIONS (continued)
NEW VEHICLE INVENTORIES (continued)
Alternative LIFO Method for Automobile Dealers
… Rev. Proc. 97-36 (Superseding Rev. Proc. 92-79)
For 2008, Many Dealers Get 5 Years’ Worth of Inflation in a Single Year .................. Mid-Year, 2009 ......... pg. 12
Updated Procedures for Automatic Changes in LIFO Methods (Rev. Proc. 2008-52)*
Alternative LIFO Inventory Method for Retail Automobile Dealers* ..................... Year-End, 2008 ......... pg. 28
IRS Will Consider Proper LIFO Treatment for Crossover Vehicles
What Is a “Crossover” Vehicle? … How Should It Be Treated for LIFO Purposes? ....... March, 2007 .............. pg. 4
Candidates for “Crossover” Classification ............................................................... March, 2007 .............. pg. 5
NADA’s Letter to the IRS … 2007 .......................................................................... March, 2007 .............. pg. 5
De Filipps’ Letter to the IRS … 2003 ...................................................................... March, 2007 .............. pg. 8
Dealership Considerations in Evaluating Alternative LIFO Method
vs. the IPIC/BLS Method * ............................................................................. PG ... December, 2006 ........ pg. 3
An Example of One of the More Difficult 2006-2007 New Item Determinations......... September, 2006 ....... pg. 43
Sample Proforma Filing Packages
For Electing the Alternative LIFO Method (Form 970) * ............................... PG ... March, 2006 .............. pg. 14
For Terminating the Alternative LIFO Election (Form 3115) * ...................... PG ... March, 2006 .............. pg. 22
For Changing to the Alternative LIFO Method (Form 3115) * ....................... PG ... March, 2006 .............. pg. 28
Saturn Price Deflation for 2005 Causes Major Dilemmas (Update #3) ......................... March, 2006 .............. pg. 2
Proposal for Third Pool LIFO Treatment for Crossover Vehicles ................................. March, 2003 .............. pg. 3
Automobile Dealer with Multiple Franchises & Locations
Can Use One Pool for All New Cars (LTR 199911044) .......................................... June, 1999 ................. pg. 8
Form 3115 Disclosures for Making Automatic Changes
Under Rev. Procs. 97-36 & 97-37 to the Alternative LIFO Method * ............ PG ... March, 1998 .............. pg. 26
Alternative LIFO Method for Auto Dealers .................................................................. September, 1997 ....... pg. 23
Alternative LIFO Method for Automobile Dealers
… Rev. Proc. 92-79 (Superseded by Rev. Proc. 97-36)
Alternative LIFO Method - A Good Summary .............................................................. March, 1995 .............. pg. 20
Unanswered Questions … Still Unanswered ................................................................. March, 1995 .............. pg. 22
Confusion Creeping Back Into the Alternative LIFO Method ....................................... September, 1994 ....... pg. 9
Year-End 1993 Index Results - General Comments & Tables ...................................... March, 1994 .............. pg. 6
Revenue Procedure 92-79: Some Questions Still Need Answers ................................. December, 1993 ........ pg. 18
IRS Appeals Settlement Guidelines For Dealers NOT Using Alt. LIFO Method ......... September, 1993 ....... pg. 7
Revenue Procedure 92-79 Update ................................................................................. March, 1993 .............. pg. 2
How Far Do You Have to Go in Determining “Item Categories?” ............................... March, 1993 .............. pg. 6
Year-End 1992 Index Results ........................................................................................ March, 1993 .............. pg. 14
Form 3115 Pro Forma Filing Package for Dealers Electing the New Method * .......... December, 1992 ........ pg. 6
Revenue Procedure 92-79: Overview ........................................................................... September, 1992 ....... pg. 3
Advantages, Disadvantages … Special Rules and Definitions................................. September, 1992 ....... pg. 4
Other Requirements and Consent Conditions .......................................................... September, 1992 ....... pg. 14
Step-by-Step Computations & Worksheet Format for Alternative LIFO Method ......... September, 1992 ....... pg. 12
Proposal Submitted to IRS July, 1992 for Simplified Alternative LIFO Method .......... September, 1992 ....... pg. 16
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 24
VIII. AUTOMOBILE DEALERS LIFO APPLICATIONS (continued)
NEW VEHICLE INVENTORIES (continued)
New Item Lists … Definition, Analyses & Comparison with IRS Lists
Comparison of SuperLIFO & IRS
New Item Determinations for New Vehicles in Year-End 2011 Inventories
Overview & Comments ...................................................................................... Mid-Year, 2012 ......... pg. 53
Comparative List Statistics ................................................................................. Mid-Year, 2012 ......... pg. 56
Complete Detail Lists Were Not Reproduced …
Only Page 1 of Autos & Page 1 of Light-Duty Trucks Detail Were Included .... Mid-Year, 2012 ......... pg. 58
Prior Year New Item Determination Lists
& Other Comparative Lists
SuperLIFO &
IRS/MVTA Lists
Compared
Model yrs. 2010-2011 … Mid-Yr., 2011 … pg. 41

Model yrs. 2009-2010 … Mid-Yr., 2010 … pg. 62

Model yrs. 2008-2009-2010 … Mid-Yr., 2009 … pg. 54

SuperLIFO
Lists Only
(Current Year)
SuperLIFO
Lists Only
With 2 Prior Years
Comparison
(3-Year List)
Model yrs. 2007 & 2008 … Not Included in Lookout
Model yrs. 2006 & 2007 … Sept., 2007 … pg. 19

Model yrs. 2005 & 2006 … Sept., 2006 … pg. 16

Model yrs. 2004 & 2005 … June, 2005 … pg. 28


Model yrs. 2003 & 2004 … June, 2004 … pg. 18
Model yrs. 2003 & 2004 … March, 2004 … pg. 12

Model yrs. 2002 & 2003 … June, 2003 … pg. 10


Model yrs. 2002 & 2003 … March, 2003 … pg. 8
Model yrs. 2001 & 2002 … June, 2002 … pg. 19


Model yrs. 2001 & 2002 … March, 2002 … pg. 27
Model yrs. 2000 & 2001 … March, 2001 … pg. 28


Model yrs. 2000 & 2001 … March, 2001 … pg. 8

Model yrs. 1999 & 2000 … March, 2000 … pg. 16
Model yrs. 1998 & 1999 … Sept., 1999 … pg. 15


Model yrs. 1998 & 1999 … March, 1999 … pg. 20
Model yrs. 1997 & 1998 … June, 1998 … pg. 11


Model yrs. 1997 & 1998 … March, 1998 … pg. 8
Model yrs. 1996 & 1997 … March, 1997 … pg. 13

Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 25
VIII. AUTOMOBILE DEALERS LIFO APPLICATIONS (continued)
NEW VEHICLE INVENTORIES (continued)
New Item Lists … Definition, Analyses & Comparison with IRS Lists (continued)
Prior Year New Item Determination Lists
& Other Comparative Lists
SuperLIFO &
IRS/MVTA Lists
Compared
Model yrs. 1995 & 1996 … March, 1996 … pg. 6

Model yrs. 1994 & 1995 … June, 1995 … pg. 18


Model yrs. 1994 & 1995 … March, 1995 … pg. 9
Model yrs. 1993 & 1994 … June, 1994 … pg. 8
SuperLIFO
Lists Only
(Current Year)
SuperLIFO
Lists Only
With 2 Prior Years
Comparison
(3-Year List)

Model yrs. 1993 & 1994 … March, 1994 … pg. 7

Model yrs. 1992 & 1993 … March, 1993 … pg. 12

IRS AUDIT ACTIVITY… POST-1992
IRS Checklist for Year-End LIFO Inventories .............................................................. Year-End, 2010 ......... pg. 21
Closing Agreement Did Not Prevent the IRS from Challenging LIFO Method
in Later Years (FAA 20100501F) ............................................................................ Mid-Year, 2010 ......... pg. 52
Section 481(a) Sample Closing Agreement ........................................................ Mid-Year, 2010 ......... pg. 56
FSA 1998-134: Section 481(a) Adjustment Required for Auto Dealer ........................ June, 1999 ................. pg. 13
IRS/MSSP Templates For Auto Dealer LIFO Calculations
Earliest Acquisitions Beware … We Think the IRS Is Wrong! ............................... June, 1994 ................. pg. 15
How the MS Computes Inflation If Dealer Doesn’t Have All Year-End Invoices...... June, 1994 ................. pg. 17
Here’s What the Templates Look Like .................................................................... June, 1994 ................. pg. 18
IRS Motor Vehicle Industry LIFO Seminar, Sept. 13, 1993 - Burbank, CA ................. September, 1993 ....... pg. 2
IRS AUDIT ACTIVITY … PRIOR TO ALTERNATIVE LIFO METHOD
FSA 1999-501: LIFO Calculations for Auto Dealer (Pre-Rev. Proc. 92-79)................ June, 1999 ................. pg. 16
FSA 1999-700: Item Definition for Auto Dealer (Pre-Rev. Proc. 92-79) * .................. June, 1999 ................. pg. 17
FSA 1999-997: Item Definition for Auto Dealer (Pre-Rev. Proc. 92-79) * .................. June, 1999 ................. pg. 18
What’s Wrong With IRS Treatment of Auto Dealers on LIFO? ................................... March, 1992 .............. pg. 8
Theory, Practice & MS Audit Issues: What’s Going on Out There? * ........................ September, 1991 ....... pg. 3
NADA Auto Dealer LIFO Workshops - 1991 ............................................................... March, 1991 .............. pg. 4
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 26
VIII. AUTOMOBILE DEALERS LIFO APPLICATIONS (continued)
USED VEHICLE INVENTORIES
Vehicle-Pool (Single, Combined Pool) Method … Rev. Proc. 2008-23
IRS Approves Single, Combined LIFO Pool Method for Used Vehicles
See detailed listing under VIII. AUTOMOBILE DEALERS LIFO APPLICATIONS
Used Vehicle Alternative LIFO Method … Rev. Proc. 2001-23
Updated Procedures for Automatic Changes in LIFO Methods (Rev. Proc. 2008-52)*
Used Vehicle Alternative LIFO Method* ................................................................ Year-End, 2008 ......... pg. 29
Determining the Cost of Used Vehicles Purchased or Taken as a Trade-in* ........... Year-End, 2008 ......... pg. 30
Changes Within the Used Vehicle Alternative LIFO Method* ................................ Year-End, 2008 ......... pg. 32
Terminating Used Vehicle LIFO Elections … Rev. Proc. 97-27*
Sample Narrative Text.............................................................................................. June, 2004 ................. pg. 12
Transmittal Letter to the IRS .................................................................................... June, 2004 ................. pg. 14
IRS Approval - Conditions Letter ............................................................................ June, 2004 ................. pg. 15
Good News for Dealers Who’ve Stayed With Their Used Vehicle LIFO Elections
Through a Few Years of Deflation … They Are Finally Rewarded by Inflation …
and Big LIFO Reserve Increases * ........................................................................... June, 2004 ................. pg. 3
At A Glance … Four Case Study Pools............................................................... June, 2004 ................. pg. 7
Detail Pool Computations ................................................................................... June, 2004 ................. pg. 8
Confusion Over Use of Different Official Guides ........................................................ September, 2001 ....... pg. 3
Same Inventory ... Different Locations ... Different Used Vehicle LIFO Results ........ September, 2001 ....... pg. 4
Rebasing LIFO Indexes to 1.000* ................................................................................. September, 2001 ....... pg. 5
Why LIFO Reserves Go Up ... Even Though Inventory Levels Go Down
... & Despite Rebasing Indexes to 1.000 In Between* ............................................. September, 2001 ....... pg. 9
Five Other Application Issues ....................................................................................... September, 2001 ....... pg. 13
Evaluating the “New and Improved” LIFO Method for Used Vehicles ........................ June, 2001 ................. pg. 4
Rev. Proc. 2001-23 … At a Glance ...................................................................... PG ... June, 2001 ................. pg. 5
IRS Motor Vehicle Technical Advisor Automotive Alert - Summary & Comments .... June, 2001 ................. pg. 6
Sub-Methods & Special Rules ....................................................................................... June, 2001 ................. pg. 10
Using Different Official Used Vehicle Guides for Different Purposes ......................... June, 2001 ................. pg. 11
Revenue Ruling 67-107 ................................................................................................. June, 2001 ................. pg. 11
Guidelines for Inventory Pool Indexes .......................................................................... June, 2001 ................. pg. 12
Eight-Step Calculation Methodology ............................................................................ June, 2001 ................. pg. 13
Form 3115 Proforma Filing Package for Changing to the R.P. 2001-23 Method ...... PG ... June, 2001 ................. pg. 14
Sample Letter to Dealers & CFOs ............................................................................ June, 2001 ................. pg. 15
Narrative Statement Attachment ............................................................................. June, 2001 ................. pg. 16
Additional Filing Comments & Cautions ................................................................ June, 2001 ................. pg. 18
Form 3115 & Schedule B ........................................................................................ June, 2001 ................. pg. 20
Form 3115 Transmittal Letter to IRS National Office ............................................ June, 2001 ................. pg. 25
Form 970 to Elect Used Vehicle LIFO ................................................................ PG ... June, 2001 ................. pg. 26
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 27
VIII. AUTOMOBILE DEALERS LIFO APPLICATIONS (continued)
USED VEHICLE INVENTORIES (continued)
Used Vehicle Alternative LIFO Method … Rev. Proc. 2001-23 (continued)
Used Vehicle LIFO … IRS Announces a Simplified Method ....................................... March, 2001 .............. pg. 1
Revenue Procedure 2001-23 Highlights … At A Glance ...................................... PG ... March, 2001 .............. pg. 4
Sample Letter to Dealers & CFOs ....................................................................... PG ... March, 2001 .............. pg. 5
Proposal to the IRS Re: Simplified LIFO Method for Used Vehicles .......................... March, 2001 .............. pg. 6
Used Vehicle LIFO - Theory & Practice
LIFO for Used Vehicles Is Still a Very Good Thing for
Dealers Who Elected It at the Right Time ............................................................... June, 2001 ................. pg. 2
Year-End Used Vehicle Inventories … Writedowns & LIFO * .................................... June, 2001 ................. pg. 27
Used Vehicle LIFO Calculations to Become More Complicated (LTR 9853003)
IRS National Office Tells How Used Vehicles Should Be Repriced ....................... March, 1999 .............. pg. 15
IRS Motor Vehicle Industry Specialist Comments
on Conformity & Used Vehicle LIFO * ................................................................... December, 1998 ........ pg. 5
Used Vehicle LIFO Elections for 1997 …
Are Recent LIFO Elections Stuck in Reverse?......................................................... December, 1997 ........ pg. 25
Used Vehicle LIFO (Update #4) .................................................................................... September, 1997 ....... pg. 2
Rev. Proc. 97-37: Used Vehicle Cost Determinations * ............................................... September, 1997 ....... pg. 25
Used Car LIFO Update .................................................................................................. June, 1997 ................. pg. 2
LIFO for Used Vehicles - Details and Debatables ......................................................... December, 1996 ........ pg. 8
LIFO for Used Vehicles - Theory & Practice ................................................................ December, 1994 ........ pg. 22
Used Vehicle LIFO - Form 970 Election Reporting
Used Vehicle LIFO Election Tax Return Reporting Proforma Package *............ PG ... March, 1996 .............. pg. 21
Form 970 Sample With Proforma Attachments * ................................................. PG ... March, 1996 .............. pg. 22
Comments & Reminders Checklist *.................................................................... PG ... March, 1996 .............. pg. 26
Used Vehicle LIFO - Terminating LIFO Elections
Terminating Used Vehicle LIFO Elections Isn’t That Difficult Either … Rev. Proc. 97-27*
Sample Narrative Text.............................................................................................. June, 2004 ................. pg. 12
Transmittal Letter to the IRS .................................................................................... June, 2004 ................. pg. 14
IRS Approval - Conditions Letter ............................................................................ June, 2004 ................. pg. 15
If You’re Terminating LIFO for Used Vehicles, Watch Your Timing (Update #6)* .... December, 2003 ........ pg. 3
Watch Out if You’re Terminating LIFO Elections for Used Vehicles (Update #5) ...... December, 2002 ........ pg. 3
IRS Makes It Easier to Terminate LIFO Elections
for Used Vehicles After Year-End (Update #4)* ..................................................... March, 2002 .............. pg. 2
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 28
VIII. AUTOMOBILE DEALERS LIFO APPLICATIONS (continued)
USED VEHICLE INVENTORIES (continued)
Used Vehicle Writedowns
IRS May Pay More Attention to Year-End Used Vehicle Valuations
Regardless of Whether LIFO Is Used ...................................................................... June, 2001 ................. pg. 1
Year-End Used Vehicle Inventories … Writedowns & LIFO * .................................... June, 2001 ................. pg. 27
PARTS & ACCESSORIES INVENTORIES
See detailed listing under IX. REPLACEMENT COST METHOD FOR VALUING PARTS INVENTORIES
IPIC (INVENTORY PRICE INDEX COMPUTATION) METHOD, INADVISABILITY OF IPIC FOR AUTO DEALERS
Inflation Indexes for 2007 Under the Alternative LIFO Method
Again Beat IPIC/BLS Deflation* .................................................................................. Spring, 2008 .............. pg. 2
A Case Study Showing the Disadvantage of the IPIC Method
for Automobile Dealerships* ......................................................................................... September, 2007 ....... pg. 6
A Look at the IPIC Method … With Special Emphasis on Its Use by Auto Dealers* ........... June, 2007 ................. pg. 3
Study Comparing Alternative LIFO Method vs. IPIC Inflation Indexes Over the
Most Recent 3, 5 and 7-Year Periods Ending with 2006* ............................................. June, 2007 ................. pg. 32
SEE ALSO DETAILED LISTINGS UNDER …
I.
I.
XII.
XV.
COST - ELIMINATION OF TRADE DISCOUNTS (FLOORPLAN ASSISTANCE PAYMENTS) AND
CERTAIN ADVERTISING FEES & EXPENSES FROM INVENTORY COST
COST - TREATMENT OF CASH DISCOUNTS
IPIC (INVENTORY PRICE INDEX COMPUTATION) METHOD
CHANGES IN ACCOUNTING METHODS
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 29
IX.
REPLACEMENT COST METHOD FOR VALUING PARTS INVENTORIES
Rev. Proc. 2006-14: Heavy Equipment Dealers May Use Replacement Cost Method …
With LIFO for Valuing Parts Inventories ............................................................................ March, 2006 .............. pg. 43
Rev. Proc. 2002-17: Valuing Parts Inventories … Whether Using LIFO or Not
… The IRS Replacement Cost Safe Harbor Method........................................................... June, 2002 ................. pg. 3
Overview & Background ............................................................................................... June, 2002 ................. pg. 5
Definitions & Requirements .......................................................................................... June, 2002 ................. pg. 6
Audit Protection for Changes ........................................................................................ June, 2002 ................. pg. 7
Procedures for Changing Methods................................................................................. June, 2002 ................. pg. 8
Recordkeeping & Other Matters .................................................................................... June, 2002 ................. pg. 9
Sample Letter to Clients ....................................................................................... PG ... June, 2002 ................. pg. 10
NADA’s Submission (Feb. 2000)
Industry Practices for Valuing Parts Inventories with LIFO Elections .......................... June, 2002 ................. pg. 11
Determining the Current-Year Cost of Items in a LIFO Parts Pool ............................... June, 2002 ................. pg. 12
NADA’s Proposals for Coordinating the Use of Replacement Cost with LIFO ............ June, 2002 ................. pg. 14
Other: IRS Motor Vehicle Technical Advisor Automotive Alert! ..................................... June, 2002 ................. pg. 16
Parts Replacement Cost - Safe Harbor Method … IRS Alert................................................... March, 2002 .............. pg. 4
Mountain State Ford Truck Sales, Inc. & the Use of Replacement Cost
for Valuing Parts Inventories … Some Recent Developments ........................................... March, 2000 .............. pg. 4
Letter to Taxpayer Advocate on Behalf of Dealers Using Replacement Cost.......................... March, 2000 .............. pg. 6
Update on LIFO Matters from the IRS Motor Vehicle Industry Specialist .............................. December, 1999 ........ pg. 2
NADA Proposals for Settling Replacement Cost Controversy ................................................ September, 1999 ....... pg. 2
One Personal Opinion on the Mountain State Ford Parts Mess ............................................... June, 1999 ................. pg. 20
Why NADA Shouldn’t Help the IRS … Yet ........................................................................... June, 1999 ................. pg. 22
Evidence that IRS Accepted Replacement Cost in the Past …
Why Did the IRS Change its Mind Now? ........................................................................... June, 1999 ................. pg. 24
FSA 1999-501: Replacement Cost Method for Valuing Parts Inventories .............................. June, 1999 ................. pg. 16
Mountain Sate Ford Truck Sales, Inc.
Dealers Can’t Use Replacement Cost for Parts Inventories on LIFO ................................. March, 1999 .............. pg. 3
At A Glance: Issues and Holdings ............................................................................. PG ... March, 1999 .............. pg. 5
The Importance of Accuracy on Form 970 ......................................................................... March, 1999 .............. pg. 8
The Court Asks: After You Bought Out Ford, Why Didn’t You Change
to Actual Cost Before Electing LIFO?........................................................................... March, 1999 .............. pg. 9
More About the Taxpayer’s Use of Replacement Cost for Parts Inventories...................... March, 1999 .............. pg. 12
The IRS Says “NO” to Use of Replacement Cost Method for Parts LIFO: LTR 9433004 ........ September, 1994 ....... pg. 3
Further Replacement Cost LIFO Technicalities .................................................................. September, 1994 ....... pg. 4
Is There Any Hope: What Should be Done? ...................................................................... September, 1994 ....... pg. 5
What the IRS Said - In Detail.............................................................................................. September, 1994 ....... pg. 6
Acceptability of Replacement Cost Accounting for “Parts-Type” Inventories ........................ June, 1994 ................. pg. 4
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 30
X.
MANUFACTURERS & COMPONENTS-OF-COST METHODS
Is Direct Labor a Separate Item in Components-of-Cost Applications? .................................. March, 2007 .............. pg. 21
Consolidated Mfg., Inc. - Termination of LIFO Election Confirmed by Appeals Court .......... June, 2002 ................. pg. 2
Appeals Court Upholds Termination of LIFO Election in Consolidated Mfg, Inc. ................. September, 2001 ....... pg. 16
Issues & Holdings ......................................................................................................... September, 2001 ....... pg. 17
CMI’s “Mixed Method” of LIFO Was Improper .......................................................... September, 2001 ....... pg. 19
Prices of Used Customer Cores .................................................................................... September, 2001 ....... pg. 20
How Should Used Cores Be Valued? ........................................................................... September, 2001 ....... pg. 21
The Market for Used Cores .......................................................................................... September, 2001 ....... pg. 23
Implications for Taxpayers Using C-O-C Methods May Be Lurking in the Appeal of
Consolidated Manufacturing, Inc........................................................................................ September, 2000 ....... pg. 3
Considerations in Evaluating Exposure where C-O-C Methods Are Used ..................... PG ... September, 2000 ....... pg. 8
Selected C-O-C References ..................................................................................................... September, 2000 ....... pg. 10
Components-of-Cost LIFO Methods: After 60 Years, Are They Legal or Not?
…Shouldn’t We Know by Now? …Or Are We Afraid to Find Out? ................................. June, 2000 ................. pg. 4
A 60-Year Timeline ................................................................................................................. June, 2000 ................. pg. 6
The AICPA & the Bar vs. the IRS ........................................................................................... June, 2000 ................. pg. 10
In a Nutshell .............................................................................................................. PG ... June, 2000 ................. pg. 11
Look… The Emperor Has No Clothes On .......................................................................... June, 2000 ................. pg. 13
1984 AICPA LIFO Issues Paper: Pros & Cons .................................................................. June, 2000 ................. pg. 15
The Commissioner’s Letter, July, 1992 .............................................................................. June, 2000 ................. pg. 17
Why the IRS Distrusts C-O-C Methods .......................................................................... PG ... June, 2000 ................. pg. 19
IRS Rulings on C-O-C Methods … At A Glance ............................................................ PG ... June, 2000 ................. pg. 21
IRS Rulings on C-O-C Methods: Issues & Holdings ......................................................... June, 2000 ................. pg. 23
A Detailed Look at the Latest Adverse C-O-C Ruling…FSA 200010009 ............................... June, 2000 ................. pg. 26
FSA 1999-622: Manufacturer Prevented from Using Components-of-Cost Method .............. June, 1999 ................. pg. 16
IRS Doesn’t Like “Components-of-Cost”/Consolidated Manufacturing, Inc. * ...................... September, 1998 ....... pg. 20
LTR 9445004: Components of Cost: More about Labor Not Being a Separate Item ........... December, 1994 ........ pg. 24
The IRS Says: NO! to Components-Of-Cost Method: LTR 9405005 .................................... March, 1994 .............. pg. 2
Issues and Holdings in LTR 9405005 ................................................................................. March, 1994 .............. pg. 3
IRS Concerns About the Components-Of-Cost Method ..................................................... March, 1994 .............. pg. 5
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 31
XI.
OTHER SPECIFIC BUSINESS APPLICATIONS
Core Remanufacturers
Safe Harbor Valuation Method for Core Inventories … Core Alternative Valuation Method
Revenue Procedure 2003-20 … At a Glance ................................................................. March, 2003 .............. pg. 6
Tax Court & IRS Upheld in Throwing Out LIFO Election…Consolidated Mfg, Inc. ........ June, 2001 ................. pg. 2
IRS Terminates Consolidated Manufacturing, Inc.’s LIFO Election Made for Some
- But Not All - Costs that Make Up Goods .................................................................... September, 1998 ....... pg. 4
Furniture Manufacturers
IRS Rejects Manufacturers’ “Item” & “Product Group” Definitions
That Do Not Clearly Reflect Income … TAM 200735020* ......................................... Mid-Year, 2009 ......... pg. 16
Heavy Construction Equipment Dealers
May Use Replacement Cost Method … With LIFO … for Valuing Parts Inventories * ....... March, 2006 .............. pg. 43
Can Include Leased Machinery in LIFO Inventory (LTR 9448004) *................................ December, 1994 ........ pg. 24
Jewelry Retailers & Wholesalers
Jewelry Retailer’s LIFO Calculations Lose Their Glitter … Poor Books & Records
Turn Precious Gem Inventory to Paste* ........................................................................ September, 1999 ....... pg. 3
At A Glance … FSA 199920002 ................................................................................ PG ... September, 1999 ....... pg. 5
How One Jeweler Applied LIFO to its Inventories ............................................................. September, 1999 ....... pg. 8
Retail Jewelry Business LIFO Calculations, Item Definition: FSA 199920002 ............... June, 1999 ................. pg. 15
Wholesaler & Retailer Item Definition and Calculation Problems: FSA 1999-627 * ........ June, 1999 ................. pg. 17
Oil Refineries
IRS Rejects Oil Refinery’s “Item” Definitions That Are Too Broad
and Do Not Clearly Reflect Income … FAA 20080401F*............................................ Mid-Year, 2009 ......... pg. 28
Other Misc.: LIFO in All Shapes and Sizes ........................................................................ March, 1995 .............. pg. 16
Wineries/Vintners
Wineries Using LIFO … IRS Audit Technique Guide Requirements for Item Definition .. Mid-Year, 2011 ......... pg. 14
At Last, A Good Year …One Wine(ry) Finally Satisfies the IRS’ Taste … ILM 201043029 .. Year-End, 2010 ......... pg. 40
More Sour Grapes for Some Wineries Using LIFO ............................................................ Mid-Year, 2010 ......... pg. 6
Winery’s LIFO Calculations Leave a Bitter Taste in the IRS’ Mouth … FAA 20064301F...... March, 2007 .............. pg. 10
Wine Industry IRS MSSP Training Guide (1995) & Other Guidance ................................ March, 2007 .............. pg. 17
Winemaker’s LIFO Calculations: FSA 1999-999 Provides Insight into IRS Thinking ........ June, 1999 ................. pg. 18
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 32
XII.
IPIC (INVENTORY PRICE INDEX COMPUTATION) METHOD
IPIC User Must Use December - Not November - as Its Reference Month
for Calculations (ILM 200911008)* ...................................................................................... Mid-Year, 2009 ......... pg. 15
Updated Procedures for Automatic Changes in LIFO Methods (Rev. Proc. 2008-52)*
Change to the Inventory Price Index Computation (IPIC) Method* ................................... Year-End, 2008 ......... pg. 30
Changes Within the Inventory Price Index Computation (IPIC) Method* ......................... Year-End, 2008 ......... pg. 31
Inflation Indexes for 2007 Under the Alternative LIFO Method
Again Beat IPIC/BLS Deflation* ........................................................................................ Spring, 2008 .............. pg. 2
A Case Study Showing the Disadvantage of the IPIC Method for Automobile Dealerships* ........ September, 2007 ....... pg. 6
Overview of Study .............................................................................................................. September, 2007 ....... pg. 6
Summary of Dealership Cumulative Inflation Indexes Computed under
the Alternative LIFO Method for the 15-Year Period 1992-2006 ................................. September, 2007 ....... pg. 7
General Motors, Ford & Toyota Dealership Analyses ........................................................ September, 2007 ....... pg. 8
BLS Tables … PPI Table 6 … CPI Table 3 … Detail Reports & Summaries .................... September, 2007 ....... pg. 14
A Look at the IPIC Method … With Special Emphasis on Its Use by Auto Dealers* ............. June, 2007 ................. pg. 3
Executive Summary ............................................................................................................ June, 2007 ................. pg. 6
How the IPIC Method Works.............................................................................................. June, 2007 ................. pg. 7
Pooling Alternatives … Rules for Taxpayers Using the IPIC Method … Many Choices ......... June, 2007 ................. pg. 10
CPI vs. PPI Tables
CPI … PPI Tables … What Do They Include? … How Are They Different? .............. June, 2007 ................. pg. 12
Which BLS Table Should Auto Dealers Chose (Elect) for Their IPIC Calculations? ......... June, 2007 ................. pg. 14
How BLS Measures Price Index Change for New Vehicles
in the Consumer Price Index .................................................................................... June, 2007 ................. pg. 15
Possible Causes of Confusion Over How Dealerships Could, Should or Must Set Up
Their LIFO Pools Under the IPIC Method ............................................................... June, 2007 ................. pg. 16
IPIC Calculation Examples
Double-Extension IPIC Method … 2-Year Example .................................................... June, 2007 ................. pg. 18
Link-Chain IPIC Method … 2-Year Example ............................................................... June, 2007 ................. pg. 22
Auto Dealership Sample Link-Chain IPIC Method Calculation........................... PG ... June, 2007 ................. pg. 24
Considerations in Evaluating the Use of the IPIC Method
in Auto Dealership LIFO Calculations, Including Checklist & Worksheets ........ PG ... June, 2007 ................. pg. 26
Need for IRS Guidance to Reduce Variations in LIFO Computations by
Auto Dealers Electing to Use the IPIC Method ............................................................. June, 2007 ................. pg. 30
Study Comparing Alternative LIFO Method vs. IPIC Inflation Indexes Over the
Most Recent 3, 5 and 7-Year Periods Ending with 2006* .................................................. June, 2007 ................. pg. 32
Findings June, 2007 ...................................................................................................... pg. 32
Summary Charts for New Vehicle Inventories .............................................................. June, 2007 ................. pg. 33
Outline of the IPIC Regulations ..................................................................................... June, 2007 ................. pg. 36
Supplementary Information & Tables ........................................................................... June, 2007 ................. pg. 38
Dealership Considerations in Evaluating Alt. LIFO Method vs. the IPIC/BLS Method *......... PG ... December, 2006 ........ pg. 3
IRS Surprises & Disappoints IPIC Users Filing Consolidated Returns … TAM 200603027 .......... September, 2006 ....... pg. 12
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 33
XII.
IPIC (INVENTORY PRICE INDEX COMPUTATION) METHOD (continued)
IPIC LIFO Resource Guide for CPAs ...................................................................................... September, 2004 ....... pg. 24
Common LIFO Misconceptions .......................................................................................... September, 2004 ....... pg. 26
Opportunities for CPAs to Improve Clients’ LIFO Situations ................................... PG ... September, 2004 ....... pg. 27
Advantages of Using the IPIC Method ...................................................................... PG ... September, 2004 ....... pg. 28
IPIC LIFO Success Stories .................................................................................................. September, 2004 ....... pg. 29
Comparison of Current-Year LIFO Inflation Indexes
Between Double-Extension and Link-Chain Methods .................................................. September, 2004 ....... pg. 31
IRS Disallows Use of Dual Index Method for IPIC LIFO Calculations
And Teaches a Few Other Lessons re: Form 3115 Disclosures * ...................................... March, 2004 .............. pg. 5
IRS Relaxes Rules for Some Changes within the IPIC LIFO Method
… Rev. Proc. 2003-45 ......................................................................................................... June, 2003 ................. pg. 28
Highlights of the Final IPIC Regulations ................................................................................. December, 2002 ........ pg. 8
BLS/IPIC Regulations Proposed Changes for LIFO Taxpayers Using CPI-PPI Indexes
Overview of the IPIC Changes............................................................................................ September, 2000 ....... pg. 11
Evaluation of the Proposed Changes ................................................................................... September, 2000 ....... pg. 15
Common Errors in Applying the IPIC Method ................................................................... September, 2000 ....... pg. 16
Weighted Harmonic Mean vs. Weighted Arithmetic Mean Example ................................. September, 2000 ....... pg. 19
Selected IPIC References .................................................................................................... September, 2000 ....... pg. 23
The IPIC Method Does Not Preclude Link-Chain Computations…FSA 200004008 .............. March, 2000 .............. pg. 12
More on Application of BLS-IPIC Method to Auto Dealers’ Inventories .............................. December, 1998 ........ pg. 3
IRS Tells IPIC/LIFO Users (in Rev. Proc. 98-49):
Just “Be Reasonable” When Jilted by the BLS ................................................................... September, 1998 ....... pg. 3
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 34
XIII. PLANNING, PROJECTING & MANAGING YEAR-END INVENTORY LEVELS
CASES & GENERAL
Managing LIFO Inventory Levels … What Not to Do & How Not to Do It ...................... March, 1997 .............. pg. 3
Ingredient Technology Corp./Sucrest.................................................................................. March, 1997 .............. pg. 4
Illinois Cereal Mills vs. Comm. ........................................................................................... March, 1997 .............. pg. 6
Ballou & Company, Inc....................................................................................................... March, 1997 .............. pg. 7
Lessons and Final Caution .................................................................................................. March, 1997 .............. pg. 10
Checklist for Identifying Issues and Documenting Year-End Purchases ................... PG ... March, 1997 .............. pg. 11
DEALERSHIP PLANNING FOR 2009 YEAR-END LIFO INVENTORIES
Deferring “Gain” on Involuntary Conversions of LIFO Inventories (Update #7)............... Mid-Year, 2011 ......... pg. 6
What’s Going to Happen to Dealers’ LIFO Reserves at the End of This Year? (Update #2) .... Year-End, 2009 ......... pg. 1
LIFO Recapture Consequences Are by No Means Hitting All Dealers in the Same Way or
With the Same Impact (Update #3) ............................................................................... Year-End, 2009 ......... pg. 2
Dealers Low on New Vehicle Inventory at Year-End May Face Stiff LIFO Reserve Recapture …
Planning May Lessen the Blow ..................................................................................... Year-End, 2009 ......... pg. 20
Detail Index for Planning (in “Tough” Years) ......................................................... Year-End, 2009 ......... pg. 21
Executive Summary … Overview ............................................................................ Year-End, 2009 ......... pg. 22
Executive Summary … Step-by-Step Year-End Planning Procedures..................... Year-End, 2009 ......... pg. 23
Recent IRS Pronouncement Affecting Planning Alternatives
Rev. Proc. 2008-23 … “Vehicle-Pool” Method .................................................. Year-End, 2009 ......... pg. 21
CCM 200825044 … IRS Guidance on Combining Pools
& Problems Arising Thereunder ..................................... Year-End, 2009 ......... pg. 24
Rev. Proc. 2008-52 … Restrictions Eased on Terminating LIFO Elections ....... Year-End, 2009 ......... pg. 25
ILM 200935024 … IRS Guidance on Sec. 481(a) Adjustment Periods in
LIFO Terminations .......................................................... Year-End, 2009 ......... pg. 26
Planning Strategies to Delay, Defer or Diffuse LIFO Recapture ............................. Year-End, 2009 ......... pg. 29
Terminating … Partial or Complete … the LIFO Election for New Vehicles .... Year-End, 2009 ......... pg. 30
Detail Analysis of ILM 200935024 .................................................................... Year-End, 2009 ......... pg. 33
Changing to Split-Up LIFO Pools, While Staying on LIFO ............................... Year-End, 2009 ......... pg. 36
Extending LIFO Election to Used Vehicles ........................................................ Year-End, 2009 ......... pg. 37
Changing to Adopt the IPIC (Inventory Price Index Computation) Method to Include
Used Vehicles (and/or Parts & Accessories) in the Overall IPIC Pool .......... Year-End, 2009 ......... pg. 38
Projection Case Studies
Case Study #1 … Analysis of LIFO Reserve Recapture Rates ........................... Year-End, 2009 ......... pg. 39
Case Study #2 … Determining the “Break-Even Point” for a LIFO Reserve ..... Year-End, 2009 ......... pg. 44
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 35
XIII. PLANNING, PROJECTING & MANAGING YEAR-END INVENTORY LEVELS (continued)
PLANNING & PROJECTING FOR YEAR-END LIFO INVENTORIES
Year-End Planning & Projections for LIFO Inventories
Need for Planning & Projections ................................................................................... Year-End, 2012 ......... pg. 36
Projections for Tax Planning Purposes .......................................................................... Year-End, 2012 ......... pg. 36
Projections to Comply with Financial Statement Conformity Requirements ................ Year-End, 2012 ......... pg. 37
Procedure Mechanics … Step-by-Step .......................................................................... Year-End, 2012 ......... pg. 38
Understanding Why (Projected) LIFO Reserves Go Up or Down................................. Year-End, 2012 ......... pg. 38
Why LIFO Reserves Change the Way They Do ................................................... PG ... Year-End, 2012 ......... pg. 39
Working Out of Anticipated Year-End Liquidation or Decrement Situations ............... Year-End, 2012 ......... pg. 40
Year-End Planning Strategies that Failed ...................................................................... Year-End, 2012 ......... pg. 40
Planning Strategies to Delay, Defer or Diffuse LIFO Recapture ................................... Year-End, 2012 ......... pg. 40
Blueprint for a Successful Year-End Strategy ............................................................... Year-End, 2012 ......... pg. 41
Year-End Purchases Checklist ....................................................................................... Year-End, 2012 ......... pg. 41
A Warning About Aggressive Year-End Inventory Planning ........................................ Year-End, 2012 ......... pg. 41
Managing LIFO Inventory Levels … Rev. Rul. 79-188 & Three Cases …
What Not to Do & How Not to Do It
Revenue Ruling 79-188 ...................................................................................... Year-End, 2012 ......... pg. 42
Ballou and Company, Inc. ................................................................................. Year-End, 2012 ......... pg. 42
Ingredient Technology Corporation .................................................................. Year-End, 2012 ......... pg. 43
Illinois Cereal Mills ........................................................................................... Year-End, 2012 ......... pg. 43
Checklist for Identifying Issues & Documenting Year-End Purchases ................ PG ... Year-End, 2012 ......... pg. 44
Dealerships’ Loss or Termination of Franchises ........................................................... Year-End, 2012 ......... pg. 45
ILM 200935024 … Discussion of How a Dealer’s Loss of its Franchise,
Coupled with the Termination of its LIFO Election, Affects its LIFO Calculations
and LIFO Reserve Recapture ................................................................................... Year-End, 2012 ......... pg. 46
Other Ideas Dealers Might Consider if Faced with Significant Projected Decrements..... Year-End, 2012 ......... pg. 48
†
NOTE: The December (or Year-End) issue of the LIFO Lookout for all years starting with Dec. 1999
through 2010 contained earlier versions of this basic information, updated as required.
This article, entitled “Year-End Planning & Projections for LIFO Inventories,”
was revised and updated in the Year-End 2012 Edition of the LIFO Lookout.
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 36
XIII. PLANNING, PROJECTING & MANAGING YEAR-END INVENTORY LEVELS (continued)
PLANNING & PROJECTING FOR YEAR-END LIFO INVENTORIES (continued)
A Head’s Up for Dealers Facing Lower LIFO Inventories at Year-End ............................. September, 2005 ....... pg. 3
A Look at How We Do Year-End Projections … Practice Guides & Sample Formats
Projecting LIFO Reserves for the Initial LIFO Election Year (Without Software) .....PG ... December, 2004 ........ pg. 6
Worksheet Approach for Determining a Blended Inflation Rate
To Apply to a Pool which Contains Multiple Makes “Refined Projections” ..... PG ...December, 2004 ........ pg. 7
Comparison of Projected LIFO Reserve Changes with Actual Changes,
with Format for Summarizing Results for Dealership Groups ........................ PG ... December, 2004 ........ pg. 8
Transmittal Letter for Year-End Projections ........................................................ PG ... December, 2004 ........ pg. 9
Documentation Checklist for Year-End LIFO Projections ................................... PG ... December, 2004 ........ pg. 10
Projecting Year-End LIFO Reserve Changes...................................................................... December, 1997 ........ pg. 13
It’s Not Too Early to Start Now .......................................................................................... September, 1996 ....... pg. 18
Procedures &- Formats for LIFO Projections ..................................................................... September, 1996 ....... pg. 20
Multi-Year LIFO Reserve Reconciliations ......................................................................... September, 1996 ....... pg. 24
Projections Proforma
Sample Projections with “Proofs ................................................................................... September, 1996 ....... pg. 26
Client Transmittal Letter ................................................................................................ September, 1996 ....... pg. 30
Projection Documentation Checklist ............................................................................. September, 1996 ....... pg. 31
Projecting Year-End LIFO Reserve Changes...................................................................... December, 1995 ........ pg. 19
Sample Letter Summarizing Projections ............................................................................. December, 1995 ........ pg. 20
Cadillac Regional Distribution Center Program Recaptures Dealer LIFO Reserves .......... March, 1995 .............. pg. 9
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 37
XIII. PLANNING, PROJECTING & MANAGING YEAR-END INVENTORY LEVELS (continued)
QUICK YEAR-END LIFO ESTIMATES BASED ON ONE-OF-EACH ITEM CATEGORY INVENTORY MIX
2012-2013 … New Vehicle Inflation Survey for Year-End (Y/E) LIFO Estimates ........... Year-End, 2012 ......... pg. 49
Summary of Inflation Indexes ........................................................................... Year-End, 2012 ......... pg. 50
Charts ............................................................................................................... Year-End, 2012 ......... pg. 51
Detail By Make for Year-End Estimates 2012-2013 New Vehicle Inflation Survey
Assuming Ending Inventory Mix of One-of-Each Item Category ............. Year-End, 2012 ......... pg. 54
2011-2012 … Summaries, Detail Lists, etc......................................................................... Year-End, 2011 ......... pg. 47
2010-2011 … Summaries, Detail Lists, etc......................................................................... Year-End, 2010 ......... pg. 50
2009-2010 … Summaries, Detail Lists, etc......................................................................... Year-End, 2009 ......... pg. 48
2008-2009 … Summaries, Detail Lists, etc......................................................................... December, 2008 ........ pg. 48
2007-2008 … Summaries, Detail Lists, etc......................................................................... December, 2007 ........ pg. 20
2006-2007 … Summaries, Detail Lists, etc......................................................................... December, 2006 ........ pg. 20
2005-2006 … Summaries, Detail Lists, etc......................................................................... December, 2005 ........ pg. 20
2004-2005 … Summaries, Detail Lists, etc......................................................................... December, 2004 ........ pg. 3
2003-2004 … Summaries, Detail Lists, etc......................................................................... December, 2003 ........ pg. 23
2002-2003 … Summaries, Detail Lists, etc......................................................................... December, 2002 ........ pg. 5
2001-2002 … Summaries, Detail Lists, etc......................................................................... December, 2001 ........ pg. 23
2000-2001 … Summaries, Detail Lists, etc......................................................................... December, 2000 ........ pg. 4
1999-2000 … Summaries, Detail Lists, etc......................................................................... December, 1999 ........ pg. 23
1998-1999 … Summaries, Detail Lists, etc......................................................................... December, 1998 ........ pg. 20
1997-1998 … Summaries, Detail Lists, etc......................................................................... December, 1997 ........ pg. 17
1996-1997 … Summaries, Detail Lists, etc......................................................................... December, 1996 ........ pg. 20
1995-1996 … Summaries, Detail Lists, etc......................................................................... December, 1995 ........ pg. 21
1994-1995 … Summaries, Detail Lists, etc......................................................................... December, 1994 ........ pg. 9
1993-1994 … Summaries, Detail Lists, etc......................................................................... December, 1993 ........ pg. 7
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 38
XIV. LIFO RECAPTURE TAX & ENTITY CHANGES - SECTION 1363(d), C TO S, LLC, Etc.
DISREGARDED ENTITIES, LLCS, ETC.
Loss of Status as a Disregarded Entity Creates Trap for
Making LIFO Election … LTR 201005026 .................................................................. Mid-Year, 2010 ......... pg. 7
No LIFO Recapture for Dealership Conversion to LLC … LTR 9644027 ......................... December, 1996 ........ pg. 4
C CORPORATION TO S CORPORATION STATUS CONVERSIONS & SECTION 1363(D) RECAPTURE
Look for Penalties when C Corporations Convert to S Status,
but Fail to Make Their LIFO Recapture Installment Payments (Update #5) ................. March, 2003 .............. pg. 2
Computation of Special “Collapsed Layer” for Pre-S Years...................................... PG ... June, 1997 ................. pg. 12
Final LIFO Recapture Regs. under Section 1363(d) ........................................................... December, 1994 ........ pg. 24
LIFO Recapture Tax & Mechanics in Changes From C to S .............................................. September, 1994 ....... pg. 15
Revenue Procedure 94-61 Guidance .............................................................................. September, 1994 ....... pg. 12
Questions & Answers … & Special Collapsed Layer Computation Example............... September, 1994 ....... pg. 14
More Questions .............................................................................................................. September, 1994 ....... pg. 11
Changes from C - S or S - C Status: It Only Gets Worse for LIFO Inventories................. June, 1994 ................. pg. 2
S Corporations, Built-in Gains, LIFO Inventories and Sections 1363(d) & 1374............... June, 1993 ................. pg. 2
LIFO Trap of the Year: S Elections ................................................................................... March, 1991 .............. pg. 6
COGGIN AUTOMOTIVE CASE
Using Coggin’s Victory in Avoiding LIFO Recapture
in Your Dealer’s Restructuring (Update #3) .................................................................. December, 2002 ........ pg. 2
Dealership Estate Planning Restructuring Avoids LIFO Reserve Recapture
… Coggin Automotive Group Wins in the Appeals Court ............................................. September, 2002 ....... pg. 3
No LIFO Recapture Triggered when S Corporation Contributes Auto Dealerships’
LIFO Inventories to Newly Formed Limited Liability Company … LTR 200123035 .... June, 2001 ................. pg. 3
Tax Court Upholds Big LIFO Reserve Recapture in Coggin Automotive Corporation
Dealership Restructuring ............................................................................................... December, 2000 ........ pg. 6
Coggin Automotive Corporation - A Complex Case: At A Glance...................... PG ... December, 2000 ........ pg. 7
Restructuring: Before, During & After ......................................................................... December, 2000 ........ pg. 9
ENTITY/GROUP RESTRUCTURINGS
Corporate Group Restructuring Triggers LIFO Recapture Tax … LTR 9716003 .............. June, 1997 ................. pg. 7
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 39
XIV. LIFO RECAPTURE TAX & ENTITY CHANGES - SECTION 1363(d), C TO S, LLC, Etc. (continued)
S CORPS. & QSSSS (QUALIFIED SUBCHAPTER S SUBSIDIARIES)
Regulations Finalized for Lookthrough LIFO Recapture
for Partnerships - QSSSs - LLCs … “Anti-Coggin” Regulations .................................. September, 2005 ....... pg. 8
LIFO Reserve Recapture in Certain Transactions Will Be Extended
by Proposed Changes to Section 1363(d) Regulations .................................................. September, 2004 ....... pg. 16
Coordinating Partnership Provisions of Sections 704, 743(b) and 754
With the LIFO Recapture Provisions of Sec. 1363(d) .............................................. September, 2004 ....... pg. 19
Proposed Changes to Expand LIFO Recapture Situations
Involving Partnerships, etc. … Text & Examples .................................................... September, 2004 ....... pg. 20
General Rules for More Typical C to S Changes .................................................. PG ... September, 2004 ....... pg. 23
More on QSSSs - S Corp. QSub Groups (Update #7) ......................................................... March, 2002 .............. pg. 3
LIFO Pitfalls for S Corp. QSub Groups ............................................................................. December, 2001 ........ pg. 6
C to S Corp. Merger - Recapture Aspects: FSA 199922011 .............................................. June, 1999 ................. pg. 15
C Corp. Merged into S Corp.: FSA 1999-1120 .................................................................. June, 1999 ................. pg. 18
RECAPTURE RELIEF UNDER SECTION 473
Hurricane Sandy - How Will It Affect Year-End Inventory Levels for Dealers? (Update #8) .... Mid-Year, 2012 ......... pg. 3
Other Relief for Dealerships Affected by Hurricane Sandy (Update #9) ............................ Mid-Year, 2012 ......... pg. 3
Relief for Dec. 31, 2011 LIFO Reserve Recapture Due to Inventory Shortages
Caused by Natural Disasters … Not Likely to Happen ................................................. Mid-Year, 2012 ......... pg. 7
NADA’s Letter to IRS/Treasury Requesting Expedited LIFO Recapture Relief
Under Section 473 for Certain Dealerships ................................................................... Mid-Year, 2012 ......... pg. 8
LIFO Reserve Recapture … Earthquakes + Tsunamis = Lower Year-End Inventories
Section 473 Relief for Recaptured LIFO Reserves? ...................................................... Year-End, 2011 ......... pg. 18
OTHER
LIFO Recapture Does Not Apply to a Former Sole Proprietorship … LTR 201010026 .... Mid-Year, 2010 ......... pg. 8
Dealers in Transition Face LIFO Recapture Issues ............................................................. December, 2001 ........ pg. 2
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LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 40
XV.
CHANGING METHODS OF ACCOUNTING FOR LIFO INVENTORIES (CAMs)
CHANGING METHODS - GENERAL
Revaluing LIFO Inventories When CAMs Require Section 481(a) Adjustments*
Overview ....................................................................................................................... Mid-Year, 2012 ......... pg. 31
Procedures & Rules for Revaluing Dollar-Value (Opening) LIFO Inventories
Under Reg. Sec. 1.263A-7 ........................................................................................ Mid-Year, 2012 ......... pg. 34
Analysis of Reg. Sec. 1.263A-7 Computation Example ................................................ Mid-Year, 2012 ......... pg. 36
Case Study Applying Revaluation Requirements
Summary of CAM, Procedures & Benefits .............................................................. Mid-Year, 2012 ......... pg. 40
Supporting Schedules ............................................................................................... Mid-Year, 2012 ......... pg. 46
Sample Form 3115 Narrative ................................................................................... Mid-Year, 2012 ......... pg. 51
Sec. 263A CAMs & Sec. 481(a) Adjustments for LIFO Inventory Restatements* ............ Mid-Year, 2011 ......... pg. 8
Closing Agreement Did Not Prevent the IRS from Challenging LIFO Method
in Later Years (FAA 20100501F) .................................................................................. Mid-Year, 2010 ......... pg. 52
Section 481(a) Sample Closing Agreement.............................................................. Mid-Year, 2010 ......... pg. 56
Some LIFO Method Changes May Become Easier to Make … Notice 2007-88 (Update #9) ........ December, 2007 ........ pg. 4
Rebasing LIFO Indexes to 1.000 in Connection with LIFO Method Changes * ................ September, 2001 ....... pg. 5
Change in Underlying Facts vs. Change in LIFO Accounting Methods: FSA 1999-1215 ........ September, 1999 ....... pg. 13
What the Tax Court Said About Disputed LIFO Change Issues ......................................... September, 1996 ....... pg. 12
Accounting Methods, Changes & Approval Disputes (Flowchart) * ......................... PG ... September, 1996 ....... pg. 16
FORM 3115 FILINGS
Revisions to Form 3115 Instructions................................................................................... Mid-Year, 2012 ......... pg. 30
Sample - 3115 Narrative Statement for 2009 Change to the Vehicle-Pool Method* .......... Year-End, 2009 ......... pg. 62
Sample - Proforma 3115 Filing Package
for Terminating an Automobile Dealership’s LIFO Election* ...................................... Mid-Year, 2009 ......... pg. 30
Sample - 3115 Narrative Statement Explaining 2008 Pooling Change* ............................. Year-End, 2008 ......... pg. 62
Sample - 3115 … Changing to the Vehicle-Pool (Single, Combined Pool) Method* ........ Spring, 2008 .............. pg. 54
Sample - 3115 Filing for Auto Dealerships Terminating Alternative LIFO Election* .....PG ... March, 2006 .............. pg. 22
Sample - 3115 Filing for Auto Dealerships Changing to the Alternative LIFO Method* .........PG ... March, 2006 .............. pg. 28
Form 3115 - Overview & General Comments .................................................................... March, 2006 .............. pg. 36
Form 3115 - Automatic Accounting Method Changes - List of Automatic CAMs ............ March, 2006 .............. pg. 40
IRS Disallows Use of Dual Index Method for IPIC LIFO Calculations
And Teaches a Few Other Lessons re: Form 3115 Disclosures * ................................. March, 2004 .............. pg. 5
Forms 970 and 3115 … Selected Recent Happenings * ..................................................... March, 2000 .............. pg. 10
Conditions for Obtaining Permission to Make and File “Late” Elections ..................... March, 2000 .............. pg. 11
Form 3115: Filing Requirements and Mechanics .............................................................. June, 1995 ................. pg. 9
Ten Suggestions for Form 3115 Filings ..................................................................... PG ... June, 1995 ................. pg. 10
During the Wait: What if Tax Returns Are Due? Running Out of Time? File Late or Extend? ...... June, 1995 ................. pg. 11
Sample Transmittal Letter to the IRS .................................................................................. June, 1995 ................. pg. 13
Change Requests: 3115s in the National Office ................................................................. March, 1991 .............. pg. 3
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 41
XV.
CHANGING METHODS OF ACCOUNTING FOR LIFO INVENTORIES (CAMs) (continued)
CURRENT REVENUE PROCEDURES
Statistical Sampling … Rev. Proc. 2011-42
Rev. Proc. 2011-42 Provides Only General Guidance on Sampling Procedures ........... Year-End, 2011 ......... pg. 27
Automatic CAMs … Rev. Proc. 2011-14
Updated Procedures for Automatic Changes in LIFO Methods …
Rev. Proc. 2011-14 (Update #5) ............................................................................... Mid-Year, 2011 ......... pg. 4
IRS Advance Consent Required CAMs … Rev. Proc. 97-27
Rev. Proc. 97-27 At A Glance .............................................................................. PG ... June, 1997 ................. pg. 3
New Procedures, Terms & Conditions Both Help and Hurt Taxpayers ........................ June, 1997 ................. pg. 4
SUPERSEDED REVENUE PROCEDURES RELATING TO CHANGES IN ACCOUNTING METHODS
Revenue Procedure 2009-39
More LIFO Method Changes Become Automatic … Rev. Proc. 2009-39 (Update #10) . Year-End, 2009 ......... pg. 4
Revenue Procedure 2008-52
Form 3115 Filings: New Revisions & New Concerns .................................................. Mid-Year, 2010 ......... pg. 22
Form 3115: At a Glance .......................................................................................... Mid-Year, 2010 ......... pg. 23
Changes Within the LIFO Method …
Automatic Changes vs. Advance Consent Changes............................................ Mid-Year, 2010 ......... pg. 34
Changes From the LIFO Method … Terminating LIFO Elections
General Discussions & Instructions for Completing Form 3115 ........................ Mid-Year, 2010 ......... pg. 36
Proforma Narrative Statement for Terminating a Dealership LIFO Election .. PG ... Mid-Year, 2010 ......... pg. 42
Updated Procedures for Automatic Changes in LIFO Methods* .................................. Year-End, 2008 ......... pg. 20
Invoiced Advertising Association Costs for New Vehicle Retail Dealerships* ....... Year-End, 2008 ......... pg. 25
Automatic Changes in LIFO Accounting Methods
Termination of LIFO Elections* ......................................................................... Year-End, 2008 ......... pg. 26
Determining Current-Year Cost* ........................................................................ Year-End, 2008 ......... pg. 27
Alternative LIFO Inventory Method for Retail Automobile Dealers* ................ Year-End, 2008 ......... pg. 28
Used Vehicle Alternative LIFO Method* ........................................................... Year-End, 2008 ......... pg. 29
Determining the Cost of Used Vehicles Purchased or Taken as a Trade-in*...... Year-End, 2008 ......... pg. 30
Change to the Inventory Price Index Computation (IPIC) Method* .................. Year-End, 2008 ......... pg. 30
Changes Within the Inventory Price Index Computation (IPIC) Method* ......... Year-End, 2008 ......... pg. 31
Changes to the Vehicle-Pool Method* ............................................................... Year-End, 2008 ......... pg. 31
Changes Within the Used Vehicle Alternative LIFO Method* .......................... Year-End, 2008 ......... pg. 32
Changes to Dollar-Value Pools of Manufacturers* ............................................ Year-End, 2008 ......... pg. 32
Revenue Procedure 2002-19
Updated Rules for Automatic LIFO & Other Accounting Method Changes (Update #2) ... June, 2002 ................. pg. 2
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LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 42
XV.
CHANGING METHODS OF ACCOUNTING FOR LIFO INVENTORIES (CAMs) (continued)
SUPERSEDED REVENUE PROCEDURES RELATING TO CHANGES IN ACCOUNTING METHODS (continued)
Revenue Procedure 2002-9
Trade Discount & Advertising Expense CAMs May Be the Answer
for Dealers Looking for Big, One-time Tax Write-Offs (Update #1)....................... December, 2002 ........ pg. 1
A Little More Background on These CAMs & Related Sec. 481(a) Adjs. (Update #2) December, 2002 ........ pg. 1
Automatic Changes in LIFO & Other Accounting Methods - Rev. Proc. 2002-9 ......... March, 2002 .............. pg. 6
At a Glance ............................................................................................................... March, 2002 .............. pg. 7
List of Automatic Changes ....................................................................................... March, 2002 .............. pg. 10
Basic Technical Considerations w/r/t (Requesting) Changes in Accounting Methods... March, 2002 .............. pg. 12
Terms & Conditions ................................................................................................. March, 2002 .............. pg. 16
Filing Procedures & Requirements .......................................................................... March, 2002 .............. pg. 18
Terminating LIFO Election* .................................................................................... March, 2002 .............. pg. 20
LIFO Changes Other than Election Terminations* .................................................. March, 2002 .............. pg. 22
Volume-Related Trade Discounts ............................................................................ March, 2002 .............. pg. 26
Revenue Procedure 99-49
More Changes in Procedures for Requesting Changes in Accounting Methods ...... March, 2000 .............. pg. 2
Revenue Procedure 98-60
Rev. Proc. 98-60: Automatic Accounting Method Changes Updated Again .......... December, 1998 ........ pg. 3
Revenue Procedure 97-37
Form 3115 Disclosures for Making Automatic Changes
Under Rev. Procs. 97-36 & 97-37 to the Alternative LIFO Method * ....... PG ... March, 1998 .............. pg. 26
Additional Revenue Procedures Amplify & Update Rev. Proc. 97-27 .................... September, 1997 ....... pg. 22
Rev. Proc. 97-37: LIFO Election Terminations *.................................................... September, 1997 ....... pg. 24
Rev. Proc. 97-37: Used Vehicle Cost Determinations * ......................................... September, 1997 ....... pg. 25
Rev. Proc. 97-37: Current Year Cost Determinations * .......................................... September, 1997 ....... pg. 26
Revenue Procedure 92-20
Revised Form 3115 for Changes in LIFO Methods ................................................. June, 1996 ................. pg. 3
When Do You Have to File Form 3115 ................................................................... June, 1996 ................. pg. 5
What Are “Separate Trades or Businesses? ............................................................. June, 1996 ................. pg. 6
Why Bother to Change? … 6 Reasons to Consider Making a “Voluntary” Change June, 1995 ................. pg. 2
“Voluntary” or Not: The Details ............................................................................. June, 1995 ................. pg. 4
Which LIFO Changes Require Advance Approval From the IRS?.......................... June, 1995 ................. pg. 6
Summary of Terms and Conditions .......................................................................... June, 1995 ................. pg. 8
LTR 9445001: Change in Item Definition Received Cut-Off Method Protection* December, 1994 ........ pg. 24
New Procedures for Changing Accounting Methods ............................................... June, 1992 ................. pg. 4
Taxpayers Not Currently Under Audit: Pre-Audit (Voluntary) vs. 90-Day Window.... June, 1992 ................. pg. 6
Taxpayers Currently Under Audit: The 180-Day Transition Rules......................... June, 1992 ................. pg. 8
Auto Dealers LIFO Amnesty? … Not! (For Everybody) ......................................... June, 1992 ................. pg. 10
Voluntary LIFO Method Change Requests (Prior to Rev. Proc. 92-20)
Rules, Requirements, Practical Problems and Form 3115 Filing Mechanics ...... June, 1991 ................. pg. 2
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 43
XVI. TERMINATING LIFO ELECTIONS
Terminating LIFO Elections: “Switching from LIFO … Strategies for Change” .................. Mid-Year, 2011 ......... pg. 5
Splitting Dollar-Value LIFO Pools …
Application to Auto Dealerships Having Their Franchises Terminated (ILM 200935024)* . Mid-Year, 2011 ......... pg. 31
Form 3115 Filings: New Revisions & New Concerns ............................................................ Mid-Year, 2010 ......... pg. 22
Changes From the LIFO Method … Terminating LIFO Elections
General Discussions & Instructions for Completing Form 3115 ................................... Mid-Year, 2010 ......... pg. 36
Proforma Narrative Statement for Terminating a Dealership LIFO Election ....... PG ... Mid-Year, 2010 ......... pg. 42
IRS Guidance on LIFO Termination Sec. 481(a) Adjustment Spread Periods …
ILM 200935024 … Overview* ........................................................................................... Year-End, 2009 ......... pg. 26
Detail Analysis .................................................................................... Year-End, 2009 ......... pg. 33
Sample - Proforma Form 3115 Filing Package
for Terminating an Automobile Dealership’s LIFO Election*............................................ Mid-Year, 2009 ......... pg. 30
Updated Procedures for Automatic Changes in LIFO Methods (Rev. Proc. 2008-52)*
Termination of LIFO Elections*.................................................................................... Year-End, 2008 ......... pg. 26
Dealerships that Terminated Their LIFO Elections … May Actually Still Be on LIFO!......... Spring, 2008 .............. pg. 3
Sample - 3115 Filing for Auto Dealerships Terminating Alternative LIFO Election* ...........PG ... March, 2006 .............. pg. 22
Dealer LIFO Election Termination Problems … “Permitted Methods”
for Valuing Inventories Formerly on LIFO ......................................................................... September, 2005 ....... pg. 16
Terminating Used Vehicle LIFO Elections Isn’t That Difficult Either … Rev. Proc. 97-27*
Sample Narrative Text ........................................................................................................ June, 2004 ................. pg. 12
Transmittal Letter to the IRS ............................................................................................... June, 2004 ................. pg. 14
IRS Approval - Conditions Letter ....................................................................................... June, 2004 ................. pg. 15
If You’re Terminating LIFO for Used Vehicles, Watch Out for Your Timing (Update #6)* .. December, 2003 ........ pg. 3
Watch Out if You’re Terminating LIFO Elections for Used Vehicles (Update #5) ................. December, 2002 ........ pg. 3
IRS Makes It Easier to Terminate LIFO Elections
for Used Vehicles After Year-End (Update #4)* ................................................................ March, 2002 .............. pg. 2
Automatic Changes in LIFO & Other Accounting Methods - Rev. Proc. 2002-9*
Terminating LIFO Election ................................................................................................. March, 2002 .............. pg. 20
LIFO Changes Other than Election Terminations ............................................................... March, 2002 .............. pg. 22
Be Careful When Terminating Used Vehicle LIFO Election if You Don’t Want
To Terminate the New Vehicle LIFO Election at the Same Time ...................................... December, 2000 ........ pg. 2
Rev. Proc. 97-37: LIFO Election Terminations *.................................................................... September, 1997 ....... pg. 24
LTR 9504090: Voluntary Termination Under Wrong Revenue Procedure............................. March, 1995 .............. pg. 4
Procedures and Pitfalls: Comparison of Revenue Procedures 88-15 and 92-20...................... June, 1993 ................. pg. 4
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 44
XVII. TIMELINES & PRACTICE GUIDES
TIMELINES
General
Calendar Year 2012 … The Year in Review ................................................................. Year-End, 2012 ......... pg. 4
Calendar Year 2011 ................................................................................................................. Year-End, 2011 ......... pg. 4
Calendar Years 2010, 2009 & 2008 ..................................................................................... Year-End, 2011 ......... pg. 5
Other - Specific
A Brief History of the Movement to Repeal the LIFO Inventory Method (2006-2012) ...Mid-Year, 2012 ......... pg. 14
PRACTICE GUIDES BY SPECIFIC TOPIC OR ISSUE
Bargain Purchase Acquisitions of Inventory
At A Glance: The Key Cases … Hamilton, Kohler & LaCrosse ........................ PG ... December, 1999 ........ pg. 5
Considerations in Evaluating Exposure ................................................................ PG ... December, 1999 ........ pg. 9
Calculations
Why LIFO Reserves Change the Way They Do * ................................................ PG ... December, 2006 ........ pg. 16
Dollar-Value LIFO Regulations … Outline of Reg. Secs. 1.472-1 through -8 ..... PG ... March, 2005 .............. pg. 7
Jewelry Retailer’s LIFO Calculations: At A Glance … FSA 199920002 ............ PG ... September, 1999 ....... pg. 5
Changes in LIFO (Accounting) Methods & Forms 3115
Proforma Narrative Statement for Terminating a Dealership LIFO Election ....... PG ... Mid-Year, 2010 ......... pg. 42
Terminating an Auto Dealer’s Alternative LIFO Method Election - Sample Filing ..... PG ... March, 2006 .............. pg. 22
Changing an Auto Dealer to the Alternative New Vehicle LIFO Method - Sample Filing... PG ... March, 2006 .............. pg. 28
CAMs for Trade Discounts & Advertising Fees and Expenses
Sample Letter for CPAs Regarding Potential Benefits ................................... PG ... March, 2004 .............. pg. 2
Checklist for TD & Ad Fees Changes in Method............................................ PG ... September, 2003 ....... pg. 22
Sample Letter to Dealership Explaining CAM Results After Changing ......... PG ... September, 2003 ....... pg. 28
Form 3115 … Sample Narrative Text - Trade Discounts & Ad Fees ............ PG ... September, 2003 ....... pg. 33
Changing an Auto Dealer to the Alternative Used Vehicle LIFO Method - Sample Filing...PG ... June, 2001 ................. pg. 14
Automatic Changes to the Alternative New Vehicle LIFO Method
under Revenue Procedures 97-36 & 97-37 - Sample Filing ................................ PG ... March, 1998 .............. pg. 26
Accounting Methods, Changes & Approval Disputes (Flowchart) ...................... PG ... September, 1996 ....... pg. 16
Ten Suggestions for Form 3115 Filings................................................................ PG ... June, 1995 ................. pg. 10
Components-of-Cost Method (for Manufacturers)
Considerations in Evaluating Exposure of Use of C-O-C Method to IRS Attack ....PG ... September, 2000 ....... pg. 8
In a Nutshell .......................................................................................................... PG ... June, 2000 ................. pg. 11
Why the IRS Distrusts C-O-C Methods................................................................ PG ... June, 2000 ................. pg. 19
IRS Rulings on C-O-C Methods … At A Glance.................................................. PG ... June, 2000 ................. pg. 21
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 45
XVII. TIMELINES & PRACTICE GUIDES (continued)
PRACTICE GUIDES BY SPECIFIC TOPIC OR ISSUE (continued)
IPIC (BLS) Method … Use of External Inflation Indexes for LIFO Calculations
Auto Dealership Sample Link-Chain IPIC Method Calculation........................... PG ... June, 2007 ................. pg. 24
Considerations in Evaluating the Use of the IPIC Method
in Auto Dealership LIFO Calculations, Including Checklist & Worksheets .. PG ... June, 2007 ................. pg. 26
Dealership Considerations in Evaluating Alt. LIFO Method vs. the IPIC/BLS Method ... PG ... December, 2006 ........ pg. 3
Opportunities for CPAs to Improve Clients’ LIFO Situations .............................. PG ... September, 2004 ....... pg. 27
Advantages of Using the IPIC Method ................................................................. PG ... September, 2004 ....... pg. 28
LIFO Elections, Form 970 Filings & Checklists
Sample Forms 970
For Dealerships Electing the Alternative LIFO Method for New Vehicles ........... PG ...March, 2006 .............. pg. 14
Also see below … “Used Vehicles - Alternative LIFO Method”
Basic Considerations for Evaluating a LIFO Election .......................................... PG ... December, 1994 ........ pg. 18
“Hot Spots” in LIFO Inventory Situations ............................................................ PG ... June, 2003 ................. pg. 5
LIFO Reserve Review Procedures ........................................................................ PG ... June, 2003 ................. pg. 7
Protecting Against LIFO Malpractice Exposure ................................................... PG ... June, 2003 ................. pg. 8
Books & Records - Sample Letter Re: Missing LIFO Workpapers for Prior Years ... PG ... March, 1995 .............. pg. 19
FSAs … At A Glance: Summary of LIFO-Related Field Service Advice ........... PG ... June, 1999 ................. pg. 14
LIFO Financial Statement Conformity Requirements
Executive Summary - Year-End Financial Statement Conformity Requirements ... PG ... Year-End, 2012 ......... pg. 24
Rev. Rul. 97-42 … Permissible Auto Dealer LIFO Reporting Variations in
Certain Factory/Manufacturer-Formatted Statements Issued
“for Credit Purposes” ..................................................................................... PG ... Year-End, 2012 ......... pg. 29
Updated Conformity Flowcharts for Dealership Year-End Reports to Manufacturers
Calendar Year Dealerships .............................................................................. PG ... Year-End, 2012 ......... pg. 30
Fiscal Year Dealerships ................................................................................... PG ... Year-End, 2012 ......... pg. 31
Relief Finally Arrives for Auto Dealers with LIFO Conformity Violations
Rev. Proc. 97-44: At A Glance ....................................................................... PG ... September, 1997 ....... pg. 4
Calendar Year Dealerships (Flowchart)................................................................ PG ... September, 1995 ....... pg. 12
Fiscal Year Dealerships (Flowchart) .................................................................... PG ... September, 1995 ....... pg. 11
Conformity “Protection” Extended to Medium & Heavy-Duty Truck Dealers .... PG ... September, 1998 ....... pg. 26
LIFO Reserve Recapture Tax
General Rules for More Typical Changes from C Corporation to “S” Status....... PG ... September, 2004 ....... pg. 23
Computation of Section 1363(d) “Collapsed Layer, for Pre-S Years on LIFO .... PG ... June, 1997 ................. pg. 12
Coggin Automotive Corporation - A Complex Case: At A Glance...................... PG ... December, 2000 ........ pg. 7
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 46
XVII. TIMELINES & PRACTICE GUIDES (continued)
PRACTICE GUIDES BY SPECIFIC TOPIC OR ISSUE (continued)
Planning, Projecting & Managing Year-End Inventory Levels
Why LIFO Reserves Change the Way They Do ................................................... PG ... Year-End, 2012 ......... pg. 39
Checklist for Identifying Issues & Documenting Year-End Purchases ................ PG ... Year-End, 2012 ......... pg. 44
Planning Considerations for 2009 Year-End LIFO Inventories............................ PG ... Year-End, 2009 ......... pg. 23
Projecting LIFO Reserves for the Initial LIFO Election Year (Without Software) . PG ... December, 2004 ........ pg. 6
Worksheet Approach for Determining a Blended Inflation Rate
to Apply to a Pool which Contains Multiple Makes “Refined Projections”.... PG ... December, 2004 ........ pg. 7
Comparison of Projected LIFO Reserve Changes with Actual Changes,
with Format for Summarizing Results for Dealership Groups ........................ PG ... December, 2004 ........ pg. 8
Transmittal Letter for Year-End Projections ........................................................ PG ... December, 2004 ........ pg. 9
Documentation Checklist for Year-End LIFO Projections ................................... PG ... December, 2004 ........ pg. 10
Checklist for Identifying & Documenting Year-End Purchases & Planning Issues ...... PG ... March, 1997 .............. pg. 11
Replacement Cost Method for Valuing Parts Inventories
Mountain Sate Ford Truck Sales, Inc.: At A Glance … Issues and Holdings ...... PG ... March, 1999 .............. pg. 5
Safe Harbor Method Using Replacement Cost (Rev. Proc. 2002-17)................... PG ... June, 2002 ................. pg. 10
Used Vehicles - Alternative LIFO Method (Rev. Proc. 2001-23)
Highlights … At a Glance ................................................................................................ PG ... June, 2001 ................. pg. 5
Sample Explanation Letter to Dealers & CFOs .................................................... PG ... June, 2001 ................. pg. 15
Sample Forms 970
For Dealerships Electing the Alternative LIFO Method for Used Vehicles........... PG ... June, 2001 ................. pg. 26
For Dealerships Electing LIFO for Used Vehicles before the IRS Issued the
Safe Harbor Alternative LIFO Method (Rev. Proc. 2001-23), with Checklist .. PG ... March, 1996 .............. pg. 22
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 47
XVIII. OTHER
HISTORICAL DEVELOPMENT OF LIFO
Confessions of LIFO Link-Chain Enthusiast … 30 Years Later* ....................................... March, 2005 .............. pg. 32
How LIFO Works (for Auto Dealers) - Reprint of Feb. 1975 Article by W. J. De Filipps)* ..... March, 2005 .............. pg. 33
LIFO at 30 … Looking Back, Sideways & Forward ........................................................... December, 2003 ........ pg. 5
Background & Perspective: Major Developments Along the Way .............................. December, 2003 ........ pg. 5
New & Used Vehicles - Contemporary LIFO Issues ..................................................... December, 2003 ........ pg. 6
Reserve Recapture Issues - Minimizing Recapture When Changing Entity Form ........ December, 2003 ........ pg. 7
S Corporation Q-Sub Groups - Integrating Opportunities & Avoiding Pitfalls ............. December, 2003 ........ pg. 8
Changes in Accounting Methods - Rules & Guidelines Updated in 2002 ..................... December, 2003 ........ pg. 8
Voluntary Termination of LIFO Elections..................................................................... December, 2003 ........ pg. 9
Looking Forward: What Lies Ahead?........................................................................... December, 2003 ........ pg. 10
CONGRESS CONSIDERS REPEAL OF LIFO METHOD & EFFORTS TO OPPOSE REPEAL OF LIFO METHOD
Will LIFO Be Around Next Year (i.e., 2013)? (Update #4)................................................ Year-End, 2012 ......... pg. 1
If LIFO Must Go … A Proposal to Ease the Pain (Update #5) ........................................... Year-End, 2012 ......... pg. 2
A Sample Letter Urging Congress Not to Repeal LIFO ............................................... Year-End, 2012 ......... pg. 7
Example Illustrating Recapture (Repayment) of a LIFO Reserve, Comparing Recapture
Under Straight-Line (Pro Rata vs. Reverse Sum-of-the-Years-Digits
Amortization Method ............................................................................................... Year-End, 2012 ......... pg. 9
An Update on Proposals to Repeal LIFO ............................................................................ Mid-Year, 2012 ......... pg. 10
Related Dangerous Proposals ... Repeal of Lower-of-Cost-or-Market (LCM) Methods ..... Mid-Year, 2012 ......... pg. 13
A Brief History of the Movement to Repeal the LIFO Inventory Method (2006-2012)Mid-Year, 2012 ......... pg. 14
Administration Revenue Proposals for 2013 ................................................................. Mid-Year, 2012 ......... pg. 16
Letter (from 22 Members of Congress) Urging President Obama Not to Repeal LIFO Mid-Year, 2012 ......... pg. 17
Letter from OMB Responding to Congress’ Letter to President Obama ....................... Mid-Year, 2012 ......... pg. 18
Response by the LIFO Coalition to the OMB Defense of Proposal to Repeal LIFO .... Mid-Year, 2012 ......... pg. 19
IFRS (International Financial Reporting Standards) vs. U.S. GAAP ............................ Mid-Year, 2012 ......... pg. 22
Status of LIFO … How Much Longer Will It Be Around? (Update #1)............................. Mid-Year, 2011 ......... pg. 1
Status of LIFO … What’s New? ......................................................................................... Mid-Year, 2010 ......... pg. 9
Will LIFO Be Around at the End of This Year? (Update #1) ............................................. Mid-Year, 2009 ......... pg. 1
In the Meantime, What Can You Do to Protect Your LIFO Elections? (Update #2) .......... Mid-Year, 2009 ......... pg. 1
What’s Going to Happen to LIFO? ..................................................................................... Mid-Year, 2009 ......... pg. 6
“Save Our LIFO” Sample Letter.................................................................................... Mid-Year, 2009 ......... pg. 10
Will the Use of the LIFO Method Be Repealed? (Update #1) ............................................ December, 2007 ........ pg. 1
At a Glance … Senate Finance Committee Hearing on June 13, 2006 ............................... June, 2006 ................. pg. 3
De Filipps’ Letter to Chairman Grassley Opposing Repeal of LIFO Method..................... June, 2006 ................. pg. 4
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 48
XVIII. OTHER (continued)
CONTRIBUTING AUTHOR(S)
Richardson, Lee … IPIC LIFO Resource Guide for CPAs ................................................. September, 2004 ....... pg. 24
Common LIFO Misconceptions.......................................................... September, 2004 ....... pg. 26
Opportunities for CPAs to Improve Clients’ LIFO Situations ..... PG ... September, 2004 ....... pg. 27
Advantages of Using the IPIC Method ...................................... PG ... September, 2004 ....... pg. 28
IPIC LIFO Success Stories ................................................................. September, 2004 ....... pg. 29
Comparison of Current-Year LIFO Inflation Indexes
Between Double-Extension and Link-Chain Methods .................... September, 2004 ....... pg. 31
… Highlights of the Final IPIC LIFO Regulations .................................. December, 2002 ........ pg. 8
… Evaluation of the Proposed Changes to the IPIC LIFO Regulations ..... September, 2000 ....... pg. 15
BIBLIOGRAPHIES & LISTS OF SUGGESTED FURTHER REFERENCES
Bargain Purchase LIFO Issues & Hamilton Industries, Inc. ............................................... March, 1996 .............. pg. 5
Components-of-Cost Methods & Manufacturers Calculations ........................................... September, 2000 ....... pg. 10
IPIC (Inventory Price Index Computation) Method ........................................................... December, 2002 ........ pg. 8
.......................................................... September, 2000 ....... pg. 23
LIFO Reserve Recapture … S Corps, Built-In Gains, LIFO & Secs 1363(d) & 1374 ........ December, 2000 ........ pg. 23
................................................................................................ June, 1993 ................. pg. 13
Projections & Planning Year-End Inventory Levels ........................................................... March, 1997 .............. pg. 12
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 49
XIX. FINDING LISTS - Cases
CASES
Amity Leather Products .............. Factoring the Effects of Change in Product Mix &
Different Production Locations Out of LIFO Indexes ..... March, 2007 .............. pg. 23
Ballou & Company, Inc. ............ Managing Year-End Inventory Levels ................................ Year-End, 2012 ......... pg. 42
................................ March, 1997 .............. pg. 7
Boecking Machinery, Inc. .......... LIFO Election Lost Due to Inadequate Books & Records .. December, 1995 ........ pg. 4
Coggin Automotive Corp. ........... Avoiding LIFO Recapture in Dealership Restructuring (Update #3) December, 2002 ........ pg. 2
...... Dealership Estate Planning Restructuring Avoids Recapture.. September, 2002 ....... pg. 3
...... Tax Court Upholds LIFO Reserve Recapture in Restructuring . December, 2000 ........ pg. 6
Consolidated
Manufacturing, Inc. .............. Termination of LIFO Election Confirmed by Appeals Court . June, 2002 ................. pg. 2
.......... Appeals Court Upholds Termination of LIFO Election ...... September, 2001 ....... pg. 16
.......... Tax Court & IRS Upheld in Throwing Out LIFO Election ...June, 2001 ................. pg. 2
.......... IRS Terminates LIFO Election for Some, But Not All, Costs. September, 1998 ....... pg. 4
Hamilton Industries, Inc. ........... Bargain Purchase of Inventories ......................................... December, 1999 ........ pg. 4
.......................................... June, 1997 ................. pg. 21
.......................................... December, 1991 ........ pg. 4
.......................................... March, 2007 .............. pg. 24
Huffman et al. v. Comm. ............ IRS Adjusts Decades of “Errors” in Link-Chain LIFO Calcs . June, 2006 ................. pg. 7
............ Appeals Court Affirms LIFO Calculation Disaster for
Huffman Automobile Dealerships* .................................... Spring, 2008 .............. pg. 2
Illinois Cereal Mills vs. Comm. ...... Managing Year-End Inventory Levels ................................ Year-End, 2012 ......... pg. 43
................................ March, 1997 .............. pg. 6
Ingredient Technology
Corp./Sucrest ......................... Managing Year-End Inventory Levels ................................ Year-End, 2012 ......... pg. 43
................................ March, 1997 .............. pg. 4
Insilco Corp. ............................... Financial Statement LIFO Conformity Requirements for Affiliated
& Consolidated Group Reporting - Sec. 472(g) .............. Year-End, 2012 ......... pg. 21
Kohler Co. And Subs .................. Bargain Purchase of Inventories ......................................... December, 1999 ........ pg. 4
.......................................... June, 1998 ................. pg. 3
.......................................... June, 1997 ................. pg. 21
.......................................... March, 1996 .............. pg. 3
LaCrosse Footwear, Inc. ............ Bargain Purchase of Inventories ......................................... December, 1999 ........ pg. 4
.......................................... June, 1998 ................. pg. 3
.......................................... June, 1997 ................. pg. 14
Mountain Sate Ford
Truck Sales, Inc..................... Dealers Can’t Use Replacement Cost Method for Parts ..... March, 1999 .............. pg. 3
Richardson, E. W........................ Auto Dealer “Item’ Definition ............................................ September, 1996 ....... pg. 3
............................................ June, 1996 ................. pg. 16
Wendle Ford Sales, Inc. ............. Factoring the Effects of (Major) Technological Changes
Out of LIFO Indexes ........................................................... March, 2007 .............. pg. 21
William Powell Co. ..................... Financial Statement LIFO Conformity Violations Cannot
Be Corrected Once Year-End Financial Statements
Have Been Released ......................................................... Year-End, 2012 ......... pg. 20
General ................................................................................ December, 1993 ........ pg. 3
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 50
XIX. FINDING LISTS - IRS Documents & Publications
ANNOUNCEMENTS
91-173 … Post-Hamilton Bargain Purchase of Inventories ................................................ June, 1997 ................. pg. 21
AUDIT TECHNIQUE GUIDES
Wineries Using LIFO … IRS Audit Technique Guide Requirements for Item Definition .. Mid-Year, 2011 ......... pg. 14
AUTOMOTIVE ALERTS (IRS MOTOR VEHICLE TECHNICAL ADVISOR)
Mar. 29, 2002 … Parts Replacement Cost - Safe Harbor Method … IRS Alert ................. June, 2002 ................. pg. 16
Mar. 29, 2002 … Parts Replacement Cost - Safe Harbor Method … IRS Alert ................. March, 2002 .............. pg. 4
Jan. 25, 2001 … Used Vehicle Alternative LIFO Method: Summary & Comments........ June, 2001 ................. pg. 6
CHIEF COUNSEL MEMORANDA (CCMs)
200825044 … Guidance on Combining Pools for Changes to the Vehicle-Pool Method ....... Year-End, 2008 ......... pg. 33
COORDINATED ISSUE PAPERS (CIPs)
Earliest Acquisitions Method for Valuing Increments (Sept., 1995 & Sept., 1994) ........... June, 1996 ................. pg. 10
.................................................................................................................................. September, 1994 ....... pg. 18
Sampling and LIFO Inventories (June, 1995) ..................................................................... September, 1995 ....... pg. 20
Election of LIFO for Bulk Bargain Purchase Inventories (Sept., 1995).............................. June, 1997 ................. pg. 21
.................................................................................................................................. September, 1995 ....... pg. 22
Treatment of Cash Discounts … IRS Requires Invoice-By-Invoice Analysis
In IRS Proposed Coordinated Issue Paper (April, 2003) ............................................... September, 2003 ....... pg. 38
Dollar-Value LIFO … Segment of Inventory Excluded from the Computation of
the LIFO Index (June 1995)........................................................................................... Year-End, 2011 ......... pg. 42
FIELD ATTORNEY ADVICE (FAAs)
20064301F … Winery’s LIFO Calculations Leave a Bitter Taste in the IRS’ Mouth ...... March, 2007 .............. pg. 10
… One Wine(ry) Finally Satisfies the IRS’ Taste … ILM 201043029........... Year-End, 2010 ......... pg. 40
20080401F … IRS Rejects Oil Refinery’s “Item” Definitions That Are Too Broad
and Do Not Clearly Reflect Income ........................................................... Mid-Year, 2009 ......... pg. 28
20100501F … Closing Agreement Did Not Prevent the IRS from Challenging
LIFO Method in Later Years..................................................................... Mid-Year, 2010 ......... pg. 52
20114702F … IFRS Statements Violated the LIFO Conformity Requirements ................ Year-End, 2011 ......... pg. 8
20114702F … IFRS Financial Statements & LIFO Conformity Requirements ....................Year-End, 2012 ......... pg. 34
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LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 51
XIX. FINDING LISTS - IRS Documents & Publications (continued)
FIELD SERVICE ADVICE (FSAs) MEMORANDA … BEFORE 1999
........
........
1998-134 …
1998-152 …
1999-501 …
…
1999-622 …
1999-622 …
1999-622 …
1999-627 …
1999-700 …
1999-909 …
1999-973 …
Field Service Advice Provides Interesting Insights into
IRS Thinking on LIFO Issues .................................................................... June, 1999 ................. pg. 12
At A Glance: Summary of LIFO-Related Field Service Advice ...... PG ... June, 1999 ................. pg. 14
What is Field Service Advice?....................................................................... September, 1998 ....... pg. 23
Section 481(a) Adjustment Required for Auto Dealer................................... June, 1999 ................. pg. 13
IRS Can’t Prevent Use of Dollar-Value LIFO Method
for Specifically Identifiable Goods … 1992 FSA Allows DVM
& Tells Agents How to Restrict Benefits ..................................................... June, 1999 ................. pg. 13
..................................................... September, 1998 ....... pg. 22
LIFO Calculations for Auto Dealer (Pre-Rev. Proc. 92-79) .......................... June, 1999 ................. pg. 16
Replacement Cost Method for Valuing Parts Inventories ............................. June, 1999 ................. pg. 16
IRS Memo July 31, 1992 Released in 1999 as FSA 1999-622 ...................... June, 2000 ................. pg. 21
Issues & Holdings .......................................................................................... June, 2000 ................. pg. 24
Manufacturer Prevented from Using Components-of-Cost Method .............. June, 1999 ................. pg. 16
Wholesaler & Retailer Item Definition and Calculation Problems ................ June, 1999 ................. pg. 17
Item Definition for Auto Dealer (Pre-Rev. Proc. 92-79) ............................... June, 1999 ................. pg. 17
Bargain Purchase of Inventory ...................................................................... June, 1999 ................. pg. 18
Auto Dealer Financial Statement Conformity Violation ............................... June, 1999 ................. pg. 18
1999-997 … Item Definition for Auto Dealer (Pre-Rev. Proc. 92-79) ............................... June, 1999 ................. pg. 18
1999-999 … Winemaker’s LIFO Calculations ................................................................... June, 1999 ................. pg. 18
1999-1120 … C Corp. Merged into S Corp. ..................................................................... June, 1999 ................. pg. 18
1999-1121 … Bargain Purchase of Inventory ................................................................... June, 1999 ................. pg. 19
1999-1215 … Change in Underlying Facts vs. Change in LIFO Accounting Methods .... September, 1999 ....... pg. 13
FIELD SERVICE ADVICE (FSAs) MEMORANDA … AFTER 1998
199911044 … Automobile Dealer with Multiple Franchises & Locations
Can Use One Pool for All New Cars .................................................... June, 1999 ................. pg. 8
199920001 … Sale of Excess Capacity Inventory Does Not Require “Vertical Slice” ..... June, 1999 ................. pg. 4
199920002 … Retail Jewelry Business LIFO Calculations, Item Definition .................... September, 1999 ....... pg. 3
At A Glance … FSA 199920002 ....................................................... PG ... September, 1999 ....... pg. 5
How One Jeweler Applied LIFO to its Inventories .................................... September, 1999 ....... pg. 8
… When Are Books & Records (In)Adequate to Support LIFO Calcs? ......... September, 1999 ....... pg. 10
… Retail Jewelry Business LIFO Calculations, Item Definition .................... June, 1999 ................. pg. 15
199922011 … C to S Corp. Merger … Recapture Aspects ............................................... June, 1999 ................. pg. 15
200004008 … The IPIC Method Does Not Preclude Link-Chain Computations .............. March, 2000 .............. pg. 12
200010009 … IRS Rulings on Components-of-Cost Methods .......................................... June, 2000 ................. pg. 21
200010009 … A Detailed Look at the Latest Adverse Components-of-Cost Ruling ........ June, 2000 ................. pg. 26
200121022 … Bargain Purchase Inventory Escapes Section 481(a) Adjustment.............. September, 2001 ....... pg. 15
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LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 52
XIX. FINDING LISTS - IRS Documents & Publications (continued)
GENERAL COUNSEL MEMORANDA (GCMs)
38478 … IRS Rulings on Components-of-Cost Methods ................................................... June, 2000 ................. pg. 21
38478 … Issues & Holdings ............................................................................................... June, 2000 ................. pg. 23
INDUSTRY SPECIALIZATION PROGRAM APPEALS SETTLEMENT GUIDELINES
Feb. 8, 2002 … Appeals Settlement Guidelines on for LIFO Cases Involving Dual
Index Methods .......................................................................................... September, 2002 ....... pg. 16
INTERNAL REVENUE SERVICE LEGAL MEMORANDA (ILMs)
200911008 … IPIC User Must Use December - Not November - as Its Reference Month
for Calculations .......................................................................................... Mid-Year, 2009 ......... pg. 15
200935024 … Discussion of How a Dealer’s Loss of its Franchise, Coupled with the
Termination of its LIFO Election, Affects its LIFO Calculations and
LIFO Reserve Recapture .......................................................................... Year-End, 2012 ......... pg. 46
… Splitting Dollar-Value LIFO Pools … Application to Auto Dealerships
Having Their Franchises Terminated ......................................................... Mid-Year, 2011 ......... pg. 31
… IRS Guidance on LIFO Termination Sec. 481(a) Adjustment
Spread Periods … Overview .................................................................... Year-End, 2009 ......... pg. 26
… Detail Analysis ........................................................... Year-End, 2009 ......... pg. 33
200945034 … Vendor Allowances for Defective Merchandise Should Be Reductions
of Inventory Cost Because They Are Similar to Trade Discounts ........... Mid-Year, 2010 ......... pg. 45
201043029 … At Last, A Good Year …One Wine(ry) Finally Satisfies the IRS’ Taste... Year-End, 2010 ......... pg. 40
LETTER RULINGS (INCLUDING TECHNICAL ADVICE MEMORANDA)
7920008 … IRS Rulings on Components-of-Cost Methods ............................................... June, 2000 ................. pg. 21
7920008 … Issues & Holdings ........................................................................................... June, 2000 ................. pg. 23
8008012 … Rebasing LIFO Indexes to 1.000 When Making LIFO Method Changes ....... September, 2001 ....... pg. 5
8137143 … Procedures, Techniques & Refinements for Splitting Dollar-Value LIFO Pools .. Mid-Year, 2011 ......... pg. 18
8137143 … Rebasing LIFO Indexes to 1.000 When Making LIFO Method Changes ....... September, 2001 ....... pg. 5
8851001 … When Are Books & Records (In)Adequate to Support LIFO Calculations? ... September, 1999 ....... pg. 10
8851001 … Books and Records .......................................................................................... December, 1993 ........ pg. 16
9243010 … Advertising Fees Are Deductible as Ordinary and Necessary,
Even Though They Must Be Paid in Order to Acquire the Vehicles ............. September, 2004 ....... pg. 12
9343001 … When Are Books & Records (In)Adequate to Support LIFO Calculations? ... September, 1999 ....... pg. 10
9343001 … Books and Records .......................................................................................... December, 1993 ........ pg. 16
9405005 … IRS Rulings on Components-of-Cost Methods ............................................... June, 2000 ................. pg. 21
9405005 … Issues & Holdings ........................................................................................... June, 2000 ................. pg. 25
9405005 … Components-of-Cost Method for Manufacturers ............................................ March, 1994 .............. pg. 2
9433004 … Parts Inventories & Replacement Cost Accounting ........................................ September, 1994 ....... pg. 3
9444002 …Valuing Increments where CPI Method Is Used .............................................. December, 1994 ........ pg. 24
9445001 … Change in Item Definition Received Cut-Off Method Protection * ................ December, 1994 ........ pg. 24
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 53
XIX. FINDING LISTS - IRS Documents & Publications (continued)
LETTER RULINGS (INCLUDING TECHNICAL ADVICE MEMORANDA) (continued)
9445004 … IRS Rulings on Components-of-Cost Methods ............................................... June, 2000 ................. pg. 21
9445004 … Issues & Holdings ........................................................................................... June, 2000 ................. pg. 25
9445004 … Components of Cost: More about Labor Not Being a Separate Item ............. December, 1994 ........ pg. 24
9446003 … Separate Pool Required for Sec. 351 Transfer of Discount Inventories .......... December, 1994 ........ pg. 24
9448004 … Leased Machinery Is Inventory for Heavy Construction Eqpt. Dealer *......... December, 1994 ........ pg. 24
9504090 … Voluntary Termination of LIFO Election Under Wrong Revenue Procedure . March, 1995 .............. pg. 4
9515001 … Form 970: How Not to Elect LIFO ................................................................ June, 1995 ................. pg. 14
9535009 … Auto Dealership Financial Statement Conformity Requirement ..................... September, 1995 ....... pg. 6
9535010 … Auto Dealership Financial Statement Conformity Requirement ..................... September, 1995 ....... pg. 6
9644027 … No LIFO Recapture for Dealership Conversion to LLC ................................. December, 1996 ........ pg. 4
9716003 … Corporate Group Restructuring Triggers LIFO Recapture Tax ....................... June, 1997 ................. pg. 7
9853003 …IRS National Office Tells How Used Vehicles Should Be Repriced ............... March, 1999 .............. pg. 15
199911044 … Automobile Dealer with Multiple Franchises & Locations
Can Use One Pool for All New Cars.......................................................... June, 1999 ................. pg. 8
200123035 … No LIFO Recapture Triggered when S Corporation Contributes
Auto Dealerships’ LIFO Inventories to Newly Formed LLC .................... June, 2001 ................. pg. 3
200239032 … IRS Clarifies Conformity Requirement
for Consolidated Group Members (Update #4) .......................................... March, 2003 .............. pg. 1
200328001 … IRS Disallows Use of Dual Index Method for IPIC LIFO Calculations
And Teaches a Few Other Lessons re: Form 3115 Disclosures * ............. March, 2004 .............. pg. 5
200522008 … IRS Allows Late Filing of Forms 970 in Complicated Auto Dealership
Reorganization Situation ............................................................................ September, 2005 ....... pg. 5
200540005 … Conformity Requirement Is Not Violated by Foreign Parent Issuing
Non-LIFO Financial Statements Involving U.S. Subsidiaries .................. September, 2005 ....... pg. 14
200540005 …Conformity Requirement Is Not Violated by Foreign Parent Issuing
Non-LIFO Financial Statements Involving U.S. Subsidiaries .................. Year-End, 2012 ......... pg. 32
200603027 … IRS Surprises & Disappoints IPIC Users Filing Consolidated Returns .... September, 2006 ....... pg. 12
200605010 … Treatment of Marketing Agreement Rebates as Trade Discounts .............. September, 2006 ....... pg. 13
200624066 … Purchase Price Adjustments, “Item” Determination & LIFO Cost Reductions.. September, 2006 ....... pg. 13
200736026 … IRS Guidance on Inventory Cost Capitalization Rules for Auto Dealers
Will Impact Dealers’ LIFO Calculations (Update #1) ............................... September, 2007 ....... pg. 1
(Update #7) ................................. December, 2007 ........ pg. 2
200735020 … IRS Rejects Manufacturers’ “Item” & “Product Group” Definitions
That Do Not Clearly Reflect Income ......................................................... Mid-Year, 2009 ......... pg. 16
200812010 … When in Doubt, File Form 970 for LLCs ................................................... Mid-Year, 2009 ......... pg. 13
200914015 … File Form 970 When a Partnership is Terminated by Section 708 ............. Mid-Year, 2009 ......... pg. 14
201005026 … Loss of Status as a Disregarded Entity Creates Trap for Making
LIFO Election .......................................................................................... Mid-Year, 2010 ......... pg. 7
201010026 … LIFO Recapture Does Not Apply to a Former Sole Proprietorship ........... Mid-Year, 2010 ......... pg. 8
201034004 … Non-LIFO Disclosures (in Supplementary Information to
Financial Statements) Receive IRS Approval .......................................... Year-End, 2010 ......... pg. 20
201034004 … Non-LIFO Disclosures (in Supplementary Information to
Financial Statements) Receive IRS Approval .......................................... Year-End, 2012 ......... pg. 33
201111004 … Deferring “Gain” on Involuntary Conversions of LIFO Inventories.......... Mid-Year, 2011 ......... pg. 10
201130010 … Missed Form 970 Filings Require Extensions ........................................... Year-End, 2011 ......... pg. 22
201136006 … Missed Form 970 Filings Require Extensions ........................................... Year-End, 2011 ......... pg. 22
201150025 … Relief Granted for the Filing of Forms 970 for Restructuring Involving
New Single Member Limited Liability Company (SMLLC) Entity ........ Mid-Year, 2012 ......... pg. 7
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 54
XIX. FINDING LISTS - IRS Documents & Publications (continued)
NOTICES
2003-4 … Look for Penalties when C Corporations Convert to S Status,
but Fail to Make Their LIFO Recapture Installment Payments (Update #5)... March, 2003 .............. pg. 2
2007-88 … Some LIFO Method Changes May Become Easier to Implement (Update #9) .December, 2007 ........ pg. 4
REVENUE PROCEDURES
79-23 … The LIFO Taxpayer’s “Bill of Rights” ............................................................... September, 1991 ....... pg. 7
… Consolidated Manufacturing, Inc. & IRS Terminations of LIFO Elections ....... September, 1998 ....... pg. 18
… Adequate Books & Records and Record Retention Requirements
for LIFO Inventories ......................................................................................... Year-End, 2010 ......... pg. 24
88-15 … Terminating LIFO Elections ............................................................................... June, 1993 ................. pg. 4
92-20 … Changing LIFO Methods (Superseded by Rev. Proc. 97-27 ............................... Various, See Detailed Index
92-79 … Alternative LIFO Method For Automobile Dealers ............................................ Various, See Detailed Index
94-61 … LIFO Recapture Tax & Mechanics in Changes From C to S ..................... PG ... June, 1997 ................. pg. 7
............................ September, 1994 ....... pg. 12
97-27 … Form 3115 … Sample Narrative Texts
Advertising Fees & Expenses Changes in Methods under Rev. Proc. 97-27 .... September, 2003 ....... pg. 36
… Changing LIFO Methods (Supersedes Rev. Proc. 92-20) .......................... PG ... June, 1997 ................. pg. 3
97-36 … Alternative LIFO Method for Auto Dealers (Supersedes Rev. Proc. 92-79) ..... September, 1997 ....... pg. 23
97-36 … Form 3115 Disclosures for Making Automatic Changes to the
Alternative LIFO Method * .................................................................. PG ... March, 1998 .............. pg. 26
97-37 … Additional Revenue Procedures Amplify & Update Rev. Proc. 97-27 ............... September, 1997 ....... pg. 22
97-37 … LIFO Election Terminations ............................................................................... September, 1997 ....... pg. 24
97-37 … Used Vehicle Cost Determinations ..................................................................... September, 1997 ....... pg. 25
97-37 … Current Year Cost Determinations ...................................................................... September, 1997 ....... pg. 26
97-44 … At A Glance ................................................................................................ PG ... September, 1997 ....... pg. 4
97-44 … Key Terms & Important Dates .................................................................. PG ... September, 1997 ....... pg. 5
97-44 … Transmittal Memo for Penalty Payments ............................................................ September, 1997 ....... pg. 7
97-44 … What It Says: Procedures for Securing Relief .................................................... September, 1997 ....... pg. 17
97-44 … Revenue Procedure 97-44 Penalty Tax for Conformity Violations…
Additional Problem Areas & Unanswered Questions.................................... December, 1997 ........ pg. 9
NADA’s Dealer Guide to the LIFO Conformity Settlement .......................... December, 1997 ........ pg. 10
Some Generalizations & Advice for Dealing with Rev. Proc. 97-44 ............ December, 1997 ........ pg. 12
98-25 … Adequate Books & Records and Record Retention Requirements
for LIFO Inventories ......................................................................................... Year-End, 2010 ......... pg. 24
… Analysis of Electronic Recordkeeping Requirements for LIFO Inventories ...... Year-End, 2010 ......... pg. 28
98-46 … Medium- & Heavy-Duty Truck Dealers Get Relief for
LIFO Conformity Violations ......................................................................... September, 1998 ....... pg. 17
… At A Glance...................................................................................... PG ... September, 1998 ....... pg. 26
… Key Terms & Important Dates......................................................... PG ... September, 1998 ....... pg. 27
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LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 55
XIX. FINDING LISTS - IRS Documents & Publications (continued)
REVENUE PROCEDURES (continued)
98-49 … IRS Tells IPIC/LIFO Users: Just “Be Reasonable” When Jilted by the BLS .... September, 1998 ....... pg. 3
98-60 … Automatic Accounting Method Changes Updated Again ................................... December, 1998 ........ pg. 3
99-49 … More Changes in Procedures for Requesting Accounting Method Changes ...... March, 2000 .............. pg. 2
2001-23 … Used Vehicle LIFO
… Confusion Over Use of Different Official Guides ..................................... September, 2001 ....... pg. 3
… Same Inventory ... Different Locations ... Different LIFO Results ............ September, 2001 ....... pg. 4
… Rebasing LIFO Indexes to 1.000* .............................................................. September, 2001 ....... pg. 5
… Why LIFO Reserves Go Up ... Even Though Inventory Levels Go Down
& Despite Rebasing Indexes to 1.000 In Between* ................................. September, 2001 ....... pg. 9
… Five Other Application Issues ................................................................... September, 2001 ....... pg. 13
… IRS Announces a Simplified Method ......................................................... March, 2001 .............. pg. 1
… Revenue Procedure 2001-23 Highlights … At A Glance................... PG ... March, 2001 .............. pg. 4
… Sample Letter to Dealers & CFOs .................................................... PG ... March, 2001 .............. pg. 5
… Proposal to the IRS Re: Simplified LIFO Method for Used Vehicles .......... March, 2001 .............. pg. 6
2002-9 … Form 3115 … Sample Narrative Texts
Trade Discount Changes in Methods under Rev. Proc. 2002-9 ....................... September, 2003 ....... pg. 33
… Volume-Related Trade Discounts ...................................................................... September, 2003 ....... pg. 31
… IRS Filing Procedures to Follow in Making Automatic Change
in Method of Accounting, Filing Forms 3115 - Rev. Proc. 2002-9 ................. September, 2003 ....... pg. 32
… Watch Out if You’re Terminating LIFO Elections
for Used Vehicles (Update #5) ........................................................................ December, 2002 ........ pg. 3
… Trade Discount & Advertising Expense CAMs May Be the Answer
for Dealers Looking for Big, One-time Tax Write-Offs (Update #1).............. December, 2002 ........ pg. 1
… More Background on These CAMs & Sec. 481(a) Adjs. (Update #2) ......... December, 2002 ........ pg. 1
… Automatic Changes in LIFO & Other Accounting Methods
… General Overview … At a Glance ............................................................... March, 2002 .............. pg. 7
… List of Automatic Changes ........................................................................... March, 2002 .............. pg. 10
… Basic Technical Considerations w/r/t (Requesting) CAMs .......................... March, 2002 .............. pg. 12
… Terms & Conditions ..................................................................................... March, 2002 .............. pg. 16
… Filing Procedures & Requirements .............................................................. March, 2002 .............. pg. 18
… Terminating LIFO Election .......................................................................... March, 2002 .............. pg. 20
… LIFO Changes Other than Election Terminations ........................................ March, 2002 .............. pg. 22
… Volume-Related Trade Discounts ................................................................ March, 2002 .............. pg. 26
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LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 56
XIX. FINDING LISTS - IRS Documents & Publications (continued)
REVENUE PROCEDURES (continued)
2002-17 … Valuing Parts Inventories … Whether Using LIFO or Not …
The IRS Replacement Cost Safe Harbor Method .......................................... June, 2002 ................. pg. 3
… Overview & Background and Definitions & Requirements ....................... June, 2002 ................. pg. 6
… Audit Protection for Changes ..................................................................... June, 2002 ................. pg. 7
…Procedures for Changing Methods ............................................................. June, 2002 ................. pg. 8
… Recordkeeping & Other Matters................................................................. June, 2002 ................. pg. 9
… Sample Letter to Clients .................................................................... PG ... June, 2002 ................. pg. 10
… NADA’s Submission (Feb. 2000)
Industry Practices for Valuing Parts Inventories with LIFO Elections... June, 2002 ................. pg. 11
Determining the Current-Year Cost of Items in a LIFO Parts Pool........ June, 2002 ................. pg. 12
NADA’s Proposals for Coordinating the Use
of Replacement Cost with LIFO ......................................................... June, 2002 ................. pg. 14
… Other: IRS Motor Vehicle Technical Advisor Automotive Alert!.............. June, 2002 ................. pg. 16
2002-19 … Updated Rules (One Year Spread for Negative Adjustments) for
Automatic LIFO & Other Accounting Method Changes (Update #2) ......... June, 2002 ................. pg. 2
2003-20 … Safe Harbor Valuation Method for Core Inventories …
Core Alternative Valuation Method ............................................................. March, 2003 .............. pg. 6
2003-45 … IRS Relaxes Rules for Some Changes within the IPIC LIFO Method. ........... June, 2003 ................. pg. 28
2003-51 … Determination of Inventory Fair Market Value in Lump Sum Acquisitions ... June, 2003 ................. pg. 2
2006-14 … Heavy Equipment Dealers May Use Replacement Cost Method …
With LIFO for Valuing Parts Inventories ...................................................... March, 2006 .............. pg. 43
2008-23 … IRS Approves Vehicle-Pool (Single, Combined) LIFO Pool Method
for New (and/or for Used) Vehicles .............................................................. Spring, 2008 .............. pg. 4
2008-43 … IRS Permits Rolling Average Cost Method for LIFO Calculations ................ Year-End, 2008 ......... pg. 3
2009-39 … More LIFO Method Changes Become Automatic (Update #10)..................... Year-End, 2009 ......... pg. 4
2011-14 … Updated Procedures for Automatic Changes in LIFO Methods (Update #5)..... Mid-Year, 2011 ......... pg. 4
2011-42 … Rev. Proc. Provides Only General Guidance on Sampling Procedures
& LIFO Inventories ....................................................................................... Year-End, 2011 ......... pg. 27
Return to List of Issues/Editions
LIFO LOOKOUT
INDEX OF ARTICLES: MARCH, 1991 - DECEMBER, 2012
PAGE 57
XIX. FINDING LISTS - IRS Documents & Publications (continued)
REVENUE RULINGS
67-107 … Use of Valuations Listed in Official Used Car Guides as the Average
Wholesale Prices for Comparable Vehicles ...................................................... June, 2001 ................. pg. 11
69-619 … Treatment of Cash Discounts … IRS Requires Invoice-By-Invoice Analysis
In IRS Proposed Coordinated Issue Paper (April, 2003)................................... September, 2003 ....... pg. 38
73-65 … Treatment of Cash Discounts … IRS Requires Invoice-By-Invoice Analysis
In IRS Proposed Coordinated Issue Paper (April, 2003)................................... September, 2003 ....... pg. 38
78-246 … Financial Statement Conformity Requirements Where Foreign Corporations
Are Involved … The 30% Threshold Test ........................................................ Year-End, 2012 ......... pg. 32
78-246 … ........................................................................................................................... September, 2005 ....... pg. 15
79-188 … Managing LIFO Inventory Levels ..................................................................... Year-End, 2012 ......... pg. 42
84-41 … Trade Discounts Must Be at “Net” … Not “Gross” … Invoice .......................... September, 2003 ....... pg. 6
97-42 … Disclosure Guidelines for Certain Automobile Dealerships ............................... Year-End, 2012 ......... pg. 17
97-42 … Permissible Auto Dealer LIFO Reporting Variations in Certain Factory/
Manufacturer-Formatted Statements Issued “for Credit Purposes” ......... PG ... Year-End, 2012 ......... pg. 29
97-42 … Conformity Flowchart for Calendar Year-End Dealerships ....................... PG ... Year-End, 2012 ......... pg. 30
97-42 … Conformity Flowchart for Fiscal Year-End Dealerships............................ PG ... Year-End, 2012 ......... pg. 31
97-42 … Don’t Get Careless with Year-End Reports ........................................................ Year-End, 2011 ......... pg. 14
97-42 … Examples of Reporting Variations ...................................................................... September, 1997 ....... pg. 6
97-42 … What It Says: Defining Conformity Violations .................................................. September, 1997 ....... pg. 13
IRS AUDIT ACTIVITY FOR AUTO DEALER LIFO CALCULATIONS
IRS Comments at the NADA Convention for Auto Dealerships Using LIFO (Update #5) ... Mid-Year, 2009 ......... pg. 2
Update on LIFO Matters from the IRS Motor Vehicle Industry Specialist......................... December, 1999 ........ pg. 2
IRS Motor Vehicle Industry Specialist Comments
on Conformity & Used Vehicle LIFO * ........................................................................ December, 1998 ........ pg. 5
IRS/MSSP Templates For Auto Dealer LIFO Calculations
Earliest Acquisitions Beware … We Think the IRS Is Wrong! ..................................... June, 1994 ................. pg. 15
How the MS Computes Inflation If Dealer Doesn’t Have All Year-End Invoices ........ June, 1994 ................. pg. 17
Here’s What the Templates Look Like .......................................................................... June, 1994 ................. pg. 18
What’s Wrong With IRS Treatment of Auto Dealers on LIFO? ......................................... March, 1992 .............. pg. 8
Theory, Practice & IRS Audit Issues: What’s Going on Out There? ................................. September, 1991 ....... pg. 3
* NOTE: To facilitate key word/subject finding:
Certain articles marked (*) are included more than once in the detailed topic/subject listings. Articles relating to IRS
Audit manuals, Guides, etc., and PRACTICE GUIDES (identified by PG) are included in the detailed topic/subject
listings and in the above FINDING LISTS. (Rev. January, 2013) G:\Group\Word\Lookout\LLIndexofArticles.docx