Tax Court ruling even worse than some think CPA James Honz's letter (March '00) alerted readers to a "potential bombshell" from the Tax Court ruling in the Mountain State Ford Truck sales case (in Denver).
However, he didn't go nearly far enough because he limited its application to "any dealership that uses the LIFO inventory method for its parts inventory together with the Ford-suggested parts inventory method." All dealers are affected by this holding, not just those using LIFO.
The Tax Court decision is a disaster about to happen to all auto and truck dealers. Every dealer in the country uses a replacement cost (manufacturers' price list) method for approximating the cost of their parts and accessories inventories. No dealer has ever been able to compute actual cost for a parts inventory. Therefore, all dealers will be affected regardless of whether they use LIFO for valuing the parts inventories. This is clear from what the Tax Court said in Mountain State Ford.
This is a classic example of relentless pursuit of perfection by the IRS (and now the Tax Court) over a really minor technicality.
Willard J. DeFilipps, CPA Mt. Prospect, IL
AIADA asks: Just what is an "import" vehicle? Thank you for the March article on AIADA's 2000 Chairwoman Barbara Vidmar.
Please note the following correction: AIADA is the American International Automobile Dealers Association. It is not the American Import Automobile Dealers Association, as you reported.
Many of the vehicles once called "imports" are in fact designed and built here in the USA. Our board of directors recognized this important shift back in 1980. That year, the AIADA board voted to change the name from the American Imported Automobile Dealers Association.
Twenty years later, distinguishing what is an "import" and what is a "domestic" vehicle is even more difficult, as mergers, acquisitions and production agreements are increasingly more common as our industry becomes truly global.
Although our board had tremendous foresight, alas, the name change still causes some confusion.
Lori Barnes AIADA Alexandria, VA
DMS systems are antiquated The problem with technology at the dealership, especially at the showroom level, is that most DMS systems are so antiquated in their ability to be useful to the average salesperson or manager who is perhaps not computer literate.
With the advent of new Windows-based technology CRM programs, training can be effortless and even a novice PC user can be very effective in using a contact manager program for tracking all leads, follow-up on prospects and sold customers, generate letters, marketing the dealer's customer base and vehicle information!
I know. I run a business development center and it can be frustrating. I believe though, that customer relationship programs will take the automotive dealership out of the Dark Ages and into the information age of the new millenium!
Paul Sewell BDC Manager Coral Springs (FL) Auto Mall
