Vehicle-Pooling

Vehicle-Pooling Method Can Save Dealerships Big Money

At a time when most auto dealerships are struggling to survive, the Vehicle-Pooling Method change creates additional deductions that can be carried back up to five years under President-elect Obama’s proposed stimulus plan. Now is the time to realize immediate cash savings due to the higher LIFO Reserve associated with the Vehicle-Pooling Method.

Obama’s plan calls for extending the net operating loss carryback to five years, up from the two-year current carryback period. This means that current losses from the 2010 tax year can offset more past income, meaning tax refunds and immediate additional cash.

Example: Without Vehicle Pooling Method & Before Economic Stimulus*
2008 income/(loss): ($1,000,000)
2007 income/(loss): $200,000
2006 income/(loss): $400,000
2005 income/(loss): $600,000
2004 income/(loss): $1,000,000
2003 income/(loss): $1,000,000
Tax Savings from carryback: $210,000

Example: With Vehicle Pooling Method & After Economic Stimulus**
2008 income/(loss): ($1,300,000)
2007 income/(loss): $200,000
2006 income/(loss): $400,000
2005 income/(loss): $600,000
2004 income/(loss): $1,000,000
2003 income/(loss): $1,000,000
Tax Savings from carryback: $455,000

SourceHOV | Tax has performed auto LIFO services for 25-years and can help determine the best way to help you or your CPA use the new economic stimulus package to maximize current tax savings and enjoy increased cash flow.

For immediate cash savings, please contact:
Julie Vincent
Account Manager
817.546.6586
julie.vincent@sourcecorptax.com

or contact us here: Contact Us

*The tax savings is calculated by multiplying the utilized carryback, $600,000, by the federal tax rate, 35%. Under current carryback rules, only the prior two years of income, $600,000, may offset the 2008 loss. The remaining $400,000 of loss is carried forward and does not provide immediate tax savings and additional cash.

**The additional loss of $300,000 in 2008 is attributable to the additional deduction created from the Vehicle-Pooling Method. The tax savings is calculated by multiplying the utilized carryback, $1,300,000, by the federal tax rate, 35%. Under the proposed Economic Stimulus Plan, the entire 2008 loss of $1,300,000 can be carried back up to five years, thus the full amount will be utilized providing immediate tax savings and additional cash.