SourceCorp: Cost Segregation Studies, R&D Tax Credits, LIFO Accounting Since 1983.

Information Needed for Basic Estimate

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New Vehicles

You will be prompted to enter the estimated year ending inventory totals at actual cost*. These totals should be split out by:
1. Manufacturing lines
2. Pools – "New Cars Inc. Demos" and "New Trucks Inc. Demos".
You will be prompted to enter for each pool (New Cars and New Trucks) the "% of prior year models in year ending inventory". The prior year model should be determined by subtracting one model year from the current model year. For example, if your dealership is currently stocking in 2008 models, the "prior year models" would be the 2007 models. The percentage is determined by the Prior Year models ($'s) divided by the total inventory ($'s). This will give you a decimal number; to determine the percentage, multiply that number by 100.
Example: You have 25 "2007 model year" trucks equaling $450,000 actual cost and 200 total trucks equaling $3,600,000 actual cost. To determine the percentage, you would perform the following steps:
1. $450,000 / $3,600,000 = .125
2. .125 x 100 = 12.5%
3. Therefore, 12.5% of your New Truck inventory is made up of prior model year unit

Used Vehicles

You will be prompted to enter the estimated year ending inventory total at actual cost* for each pool ("Used Cars" and "Used Trucks").

* - Helpful hints regarding inventory totals at actual cost:

Inventory totals may include:

dealer cost of the car

dealer added accessories

advertising cost

other inventory expenses

Inventory totals should NOT include:

holdback

write downs

depreciation

any applicable “Dealer Discounts” that your dealership elected to “net” from inventory (trade discounts, etc.) for tax purposes*

*- Please note: If your dealership elected to net “Dealer Discounts” for tax purposes, the estimated inventory values should exclude these discounts. If the dealership is still participating in the same manufacturer programs as the prior year, and the mix of inventory can be deemed similar to the prior year, you may opt to determine your estimated Dealer Discount value by applying last year’s actual % of discounts to this year’s estimated inventory total. If SourceCorp determines your annual discount amounts, refer to your LIFO reports from the prior year to see the lookup totals that were netted from the year ending inventory totals; it is from this that you can determine what last year’s % of inventory dollars were dealer discounts and thereby netted from the final inventory dollars.