Will’s Blog (“Will’s World”)

Q & A Corner*^†

New Question Open for Member Response:

With regard to insurance hail damage payments, does anyone have any insight/practical experience with possible involuntary conversion under 1033 and replacement property.  Internal dealership people will be able to fix damage for much less than insurance payment.  Is it possible to purchase new inventory with a zero basis and defer the gain until the inventory is sold?

Please e-mail your responses to university@defilipps.com and we will share them here.  We will also post this to our Linked-In“De Filipps University Dealer Tax Advisors Discussion Group” for additional input.

Previous Question:

With regard to the new Tangibles Regulations on the treatment of capital improvements … What happens when a dealership does a major overhaul in plumbing in 2014 and then does a major overhaul to the same plumbing in 2024. Can you write off the balance of the 2014 improvements?

Response^†:

The change (CAM #177) seems to apply only to buildings and building components. Your question involved the plumbing system, which is a “building system” under the new definitions in the Regulations. Right now, it seems unclear whether the write-off for work done which affects a “building system” would get the same favorable treatment as the write-off for work done which affects a “building” or a “building component.”

However, it seems that most of the businesses doing cost segregation studies consider all of the building systems as if they were includable for this favorable treatment.

What Q & A Corner is. Another integral element of De Filipps University is its Community / Discussion forum. This is De Filipps University’s feedback venue. It is a forum (moderated by Willard J. De Filipps, CPA) where Members can …

• Pose questions or problems regarding current or anticipated LIFO issues affecting practitioners and taxpayers.
• Pose questions or problems regarding current or anticipated income tax and financial accounting issues affecting auto dealerships in the challenging environment/industry in which they operate.
• Discuss guidance on LIFO and/or dealer tax issues available from the Internal Revenue Service and from tax cases and decisions.
• Pose questions or problems to find out how others have addressed these challenges … in terms of what has worked and what has not worked.
• Test or confirm thinking about approaches and solutions to challenges and problems.
• Share experiences, practical information and/or resources.
• Discuss and exchange ideas, suggestions and feedback for proceeding where uncertainty exists.  
• Provide feedback and exchange ideas, resources and practical information.

How it works. Members should e-mail their questions (or responses to posted questions) to university@defilipps.com (please identify the subject as “Q&A Corner”). Willard De Filipps will provide responses, but he also invites University Members to offer their own thoughts which will be posted, if possible.

While similar to our LinkedIn Discussion Groups, this venue serves as an alternate and/or adjunct for those Members who do not use LinkedIn.com. Also, it covers topics from both of our University Tracks … It is for LIFO Track members as well as Dealer Tax Track members – questions do not need to be applicable to both tracks. And, questions that are applicable to more general business tax issues will be considered.

*Disclaimers:

De Filipps University, Willard J. De Filipps, CPA, PC and Willard J. De Filipps, CPA reserve the right to determine the appropriateness of all questions and responses. Questions and responses may not be posted, per the discretion of De Filipps University, et al. All submissions that are posted will be anonymous, without any Member identification included for public viewing; however, anonymous submissions will not be considered.

^†IMPORTANT NOTICE: The information and comments included on this web site are intended to provide accurate, general information on dealer tax and LIFO matters and they should not be construed as offering accounting or legal advice or accounting or legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only. Readers should consult their certified public accountant, attorney and/or other competent advisors to discuss their own situations and specific dealer tax and LIFO questions. Mechanical or electronic reproduction or photo capture reproduction is prohibited without permission of Willard J. De Filipps, CPA, PC.

Nothing contained on this web site shall be construed as a binding obligation or waiver of rights of Willard J. De Filipps, CPA, PC. The formation of any contract, waiver of terms of an existing contract, or acceptance of notice may only be accomplished in a physically signed writing executed by an authorized representative of Willard J. De Filipps, CPA, PC.

IRS Circular 230 Disclosure: To ensure compliance with Treasury Department regulations, we inform you that any U.S. Federal tax advice contained on this web site (including any pdf-linked documents) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed under the U.S. Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

 Dealer Tax Community

LinkedIn Dealer Tax Advisors Discussion Group

LIFO Community

LinkedIn LIFO Discussion Group