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Who We Serve · Car Companies & Dealerships

Tax and CFO work for dealers who finance their inventory.

A dealership’s return turns on floor plan interest, LIFO, demonstrators, factory money and, for buy-here-pay-here operators, the economics of a loan portfolio. We work the tax rules and the dealer financial statement together so the store, the group and the owners are planned as one.

Schedule a Strategy Session Where the leverage is
  • Franchised new-car dealers
  • Independent used-car dealers
  • Buy-here-pay-here operators
  • Multi-rooftop dealer groups
  • RV, boat and trailer dealers
  • $32M2026 §448(c) gross receipts test; dealers under it are exempt from §163(j), with related stores aggregated1,2,3
  • $10,000Yearly cap on buyers’ new car-loan interest deduction, 2025–2028, for new U.S.-assembled personal vehicles4
  • Sep 30, 2025Last acquisition date for the new, used and commercial clean vehicle credits (§30D, §25E, §45W)4,5
  • 15 daysDeadline to file Form 8300 after receiving more than $10,000 in cash in one or related transactions6

Figures verified October 23, 2026 · sources at the end of this page

The financial shape of the business

Inventory, financing and fixed ops drive the numbers.

Three things make dealership tax and finance different from other retail.

  1. 01

    Inventory is financed, not owned outright

    New and used units sit on a floor plan line secured by the inventory. That interest gets special treatment under §163(j), and the same treatment can switch off bonus depreciation for the whole store in a given year.

  2. 02

    Inventory accounting is a tax decision

    LIFO pools, conformity with the statements you send owners and lenders, and recapture if a C corporation elects S status are often worth more than any single deduction. They need a multi-year view.

  3. 03

    Some dealers are also lenders

    Buy-here-pay-here and in-house finance turn a dealership into a consumer lender: no installment method on dealer sales, bad-debt timing that follows charge-offs, and Form 1098-VLI reporting on qualifying loans.

Tax Advisory

Where dealer tax returns are won or lost.

Current through October 2026, including P.L. 119-21 and the final car-loan interest regulations.

  • Floor plan interest and §163(j)Floor plan financing interest, interest on debt used to buy motor vehicles held for sale or lease and secured by that inventory, is deductible in full on top of the cap of 30% of adjusted taxable income. For tax years beginning after 2024, ATI again adds back depreciation and amortization, and trailers and campers designed for temporary living quarters now count as motor vehicles. Dealers at or under the $32 million §448(c) average gross receipts test for 2026 are exempt from §163(j), but related stores are aggregated under §448(c)(2).2,4,1,3
  • The floor plan bonus-depreciation trapUnder §168(k)(9)(B), property used in a business with floor plan debt isn’t eligible for bonus depreciation in a year the floor plan interest is “taken into account” under §163(j)(1)(C). The regulations treat that as happening only when total business interest, including floor plan interest, exceeds business interest income plus 30% of ATI, and then the bar reaches everything that business places in service that year. With EBITDA-based ATI restored, a dealer that needed the floor plan add-back under the 2022–2024 EBIT rules may not need it now, which can reopen 100% bonus; we run the test before the year’s capital plan is final.7,8,4
  • LIFO pools for new and used vehiclesRev. Proc. 97-36’s Alternative LIFO Method uses separate pools for new cars and new light-duty trucks (14,000 pounds or less), and Rev. Proc. 2001-23 does the same for used vehicles; the Vehicle-Pool Method of Rev. Proc. 2008-23 allows one pool for all new vehicles and one for all used. Each is an automatic method change under Rev. Proc. 2025-23, made on a cut-off basis. LIFO also carries a §472(c) conformity requirement for income reported to owners and for credit purposes, and a C corporation that elects S status includes its LIFO recapture amount in income for its last C year under §1363(d), with the added tax payable in four equal installments.9,10,11,12
  • Demonstrators and loanersDemo use by a full-time automobile salesperson is a tax-free working condition fringe only if it stays in the sales area, which may be treated as a 75-mile radius or the salesperson’s one-way commute if longer, and personal use is substantially restricted: no family use, no vacation trips, no storing personal possessions, and limited off-hours mileage. “Full-time” means customarily spending at least half the business day on the floor or as a sales manager, at least 1,000 hours a year, and at least 25% of gross income from those sales activities. Personal use by anyone else, including technicians, office staff and owners who don’t customarily sell, is taxable compensation, commuting included.13
  • Facility image payments are incomeIRS Chief Counsel concluded in AM 2014-004 that manufacturer payments under facility image upgrade programs are includable in the dealership’s gross income, rejecting treatment as nonshareholder capital contributions under §118, basis reductions or vehicle price adjustments. The memorandum relies on John B. White, Inc. v. Commissioner, 55 T.C. 729 (1971), and, while not precedent, states the IRS’s view; the construction spend is then depreciated on its own schedule.14
  • Service contracts and warranty insuranceAn accrual-method retailer of motor vehicles that sells multi-year service warranty contracts can, in specified circumstances, change to the service warranty income method of Rev. Proc. 97-38, which includes qualifying advance payments in income generally over the life of the obligation; the change is automatic and prospective under Rev. Proc. 2025-23. A lump-sum premium paid in advance to insure those contracts is capitalized and amortized over the policy’s life rather than deducted when paid. We first sort the contracts the store is obligor on from those it sells for an outside administrator.10
  • Buy-here-pay-here economicsThe installment method isn’t available for dealer dispositions of personal property or for sales of inventory (§453(b)(2)), so a BHPH dealer reports the full gross profit when the car is sold, not as payments arrive. Relief comes through §166: a deduction when a contract becomes worthless, or for the part charged off when it is recoverable only in part. That makes charge-off policy, repossession accounting and sales of paper to third parties tax decisions as well as credit decisions.15,16
  • Car-loan interest: what dealers originate and reportFor 2025–2028, buyers can deduct up to $10,000 a year of interest on a loan incurred after 2024 and secured by a first lien on a new, U.S.-assembled vehicle bought for personal use, reduced by $200 per $1,000 of modified AGI above $100,000 ($200,000 joint). Under T.D. 10054, a demonstrator held primarily for sale doesn’t start “original use” with the dealer, but a service loaner generally does, so a sold loaner usually won’t qualify. A business that receives $600 or more of interest on a specified passenger vehicle loan from an individual in a year files Form 1098-VLI. Because original use must begin with the buyer, a BHPH book of used vehicles generally falls outside the deduction.4,17

CFO Advisory

The dealer metrics we report on.

Built from your DMS and factory statement so management reporting and the tax return reconcile.

MetricWhat it tells youCadence
Days’ supply and aged inventoryUnits on hand against the selling rate, with units past 60 and 90 days flagged. Aged units carry floor plan interest and curtailment pressure every day they sit.Weekly · New and used
Floor plan interest per retailed unitTies carrying cost to the sale and shows how much manufacturer floor plan assistance actually offsets.Monthly · Per franchise
Gross profit per vehicle retailedFront-end and F&I gross reported separately, net of chargebacks. It shows whether volume is being bought with margin.Monthly · New, used, F&I
Fixed absorptionService, parts and body shop gross profit as a share of total dealership overhead. It measures how much fixed cost survives a slow sales month.Monthly
Technician productivity and effective labor rateHours flagged against hours available, and dollars collected per hour sold. It separates a capacity problem from a pricing problem in the service drive.Weekly · Per technician
§163(j) headroomBusiness interest against business interest income plus 30% of ATI, projected before year-end. It decides whether floor plan interest is “taken into account” and whether bonus depreciation is available.Quarterly
BHPH delinquency and static-pool lossesAccounts 30 and 60-plus days past due, and cumulative net loss by origination month. It is the earliest read on underwriting or collections drift.Weekly · Monthly pools
LIFO reserve and recapture exposureThe reserve by pool and the tax that would come due on an S election or a dealership sale.Annually · At pool review

Accounting & Compliance

What we handle, and who we work beside.

Federal tax, payroll and reporting stay with us; licensing, sales tax and attest work stay with the specialists who own them.

Handled by our team

  • Form 8300 — cash and sub-$10,000 cashier’s-check tracking, 15-day filing, January 31 customer statements and e-filing
  • Form 8990 — the §163(j) computation with floor plan interest tracked separately
  • LIFO — pool calculations, conformity review and Form 3115 for method changes
  • Demonstrator and loaner policies — written restrictions, use logs and W-2 inclusion for nonqualifying use
  • Form 1098-VLI — interest statements on in-house specified passenger vehicle loans
  • Commission and flat-rate payroll — including FLSA overtime status by role for W-2 code TT
  • Month-end close tied to the factory financial statement and DMS schedules

Coordinated with your specialists

  • Sales tax, title and registration fees — coordinated with your sales-tax provider or DMS vendor
  • Reviewed or audited statements for floor plan lenders and manufacturers — we build the books, LIFO schedules and reconciliations; your audit firm issues the report
  • F&I product reinsurance and producer licensing — coordinated with your product administrator and insurance counsel
  • Cost segregation on facility projects — coordinated with an engineering-based study provider

What changed · What’s next

Dates on the dealer calendar.

Law changes and deadlines that affect 2026 and 2027 planning.

  1. P.L. 119-21 enacted

    Restored EBITDA-based ATI for tax years beginning after 2024, extended floor plan treatment to trailers and campers, created the car-loan interest deduction for loans incurred after 2024, and reinstated 100% bonus depreciation for property acquired after January 19, 2025.4

  2. Clean vehicle credits end

    The new (§30D), used (§25E) and commercial (§45W) clean vehicle credits don’t apply to vehicles acquired after this date. For the new clean vehicle credit, a vehicle placed in service later still qualifies if a binding written contract was signed and a payment made by September 30, 2025, and the seller reported the sale to the IRS.4,5

  3. Capitalized interest runs through §163(j)

    For tax years beginning after December 31, 2025, the §163(j) limit applies regardless of whether interest would be capitalized, allowed interest is applied first to amounts that would be capitalized, and interest capitalized under §263A(f) is no longer business interest. Dealers financing a facility build should model the two together.4,2

  4. EV charger credit ends

    The §30C alternative fuel vehicle refueling property credit doesn’t apply to property placed in service after June 30, 2026, which matters for dealer charging installations that slipped past that date.18


  5. Ahead

    Final car-loan interest regulations effective

    T.D. 10054 finalizes the §163(h)(4) deduction rules and Form 1098-VLI reporting. For 2025 interest, Notice 2025-57 treated a lender as compliant if it made a statement of total interest received available to the borrower.17


  6. Ahead

    First W-2s with overtime code TT

    2026 Forms W-2 are due February 1, 2027. Salespeople, partsmen and mechanics primarily selling or servicing vehicles for a dealer are exempt from FLSA overtime under 29 U.S.C. §213(b)(10)(A), so their overtime isn’t qualified overtime compensation; other staff paid FLSA-required overtime can qualify.19,20,21

The Beaconshire Method

How an engagement runs.

Four phases, one accountable team. Tax, CFO and accounting work move together, so a decision made in one discipline is already reflected in the other two.

  1. Phase 01

    Discovery

    We read the factory statement, DMS schedules, floor plan agreements and three years of returns, and map LIFO pools, §163(j) history and related-store aggregation.

  2. Phase 02

    Strategy

    We model §163(j) headroom against the capital plan, LIFO pooling and recapture exposure, the entity structure for the store and its real estate, and owner compensation.

  3. Phase 03

    Implementation

    We file method changes and elections, rebuild demo and Form 8300 procedures, set up Form 1098-VLI reporting where it applies, and align month-end close with the factory statement.

  4. Phase 04

    Stewardship

    Monthly close and KPI reporting, quarterly §163(j) and estimate checks, year-end LIFO and tax filings, and IRS representation when an examiner calls.

Run the numbers first

Calculator13-Week Cash Flow & RunwayWeek-by-week closing cash with payroll, estimated-tax dates and one-off items — the low point and runway. CalculatorBusiness Loan, SBA Payment & DSCRConventional, SBA 7(a) and 504 payments, effective APR, amortization and the DSCR test lenders apply. CalculatorBusiness Valuation & Exit ReadinessSDE and EBITDA, industry multiples from closed transactions and an eight-factor exit-readiness score.

Where this work lives

Tax Advisory & Planning

Year-round planning, entity design and multi-year projections — scoped so the savings justify the fee.

Explore advisory →

Fractional CFO

Forecasts, KPI dashboards, lender and board reporting, and a monthly close review.

Explore fractional CFO →

Bookkeeping

Tax-ready books and cleanup — the foundation every strategy and forecast depends on.

Explore bookkeeping →

FAQ

Common questions.

Can we take 100% bonus depreciation on a new service drive?

Possibly. Interior work is often qualified improvement property and bonus-eligible, but §168(k)(9)(B) removes bonus for any year your floor plan interest is “taken into account” under §163(j). That turns on whether total business interest exceeds business interest income plus 30% of ATI. We run the calculation for the year before assets are placed in service and use §179 where bonus isn’t available.

Should we switch to the Vehicle-Pool Method?

It depends on your mix and history. A single new-vehicle pool can absorb a shift between cars and trucks that would liquidate a layer under a two-pool structure. The change is automatic under Rev. Proc. 2025-23 and made on a cut-off basis with a new base year, so there is no catch-up adjustment. We model it against your inventory history before filing Form 3115.

Will our customers be able to deduct their car-loan interest?

Only on new vehicles whose final assembly occurred in the United States, bought for personal use with a loan incurred after 2024 and secured by a first lien. Leases, fleet sales, salvage-title vehicles and used vehicles don’t qualify. A demonstrator held for sale keeps the vehicle eligible; a sold service loaner generally doesn’t.

Do our technicians and salespeople get the no-tax-on-overtime deduction?

Generally not. Salespeople, partsmen and mechanics primarily selling or servicing vehicles for a dealer are exempt from FLSA overtime, and the IRS says overtime the FLSA doesn’t require doesn’t qualify, even if you pay it. Employees outside that exemption who earn FLSA-required overtime can qualify, and payroll reports only the premium portion in box 12, code TT.

We’re a C corporation with a large LIFO reserve. Can we elect S status?

Yes, but §1363(d) includes the LIFO recapture amount in income for the last C corporation year, and the added tax is paid in four equal installments starting with that year’s return. We quantify the cost and compare it with the long-run savings before the election is filed.

We finance our own used cars. Can we report gross profit as we collect?

No. §453 excludes dealer dispositions of personal property and inventory sales from the installment method, so gross profit is reported in the year of sale. Bad debts are deducted under §166 when contracts become worthless or are partly charged off, which makes a consistent, documented charge-off policy part of your tax position.

Other industries we serve

Sources

  1. [1]Rev. Proc. 2025-32 — 2026 inflation-adjusted items — IRS
  2. [2]26 U.S.C. §163 — Interest (including §163(h)(4) and §163(j)) — Legal Information Institute (Cornell Law School)
  3. [3]26 U.S.C. §448 — Limitation on use of cash method of accounting — Legal Information Institute (Cornell Law School)
  4. [4]Public Law 119-21 (One Big Beautiful Bill Act), 139 Stat. 72 — §§70203, 70301, 70303, 70341, 70501–70504 — Congress.gov
  5. [5]Credits for new clean vehicles purchased in 2023 or after — IRS
  6. [6]IRS Form 8300 Reference Guide — IRS
  7. [7]26 U.S.C. §168 — Accelerated cost recovery system (§168(k)(9)) — Legal Information Institute (Cornell Law School)
  8. [8]26 CFR §1.168(k)-2 — Additional first year depreciation deduction — eCFR
  9. [9]Rev. Proc. 2008-23 — Vehicle-Pool Method (discussing Rev. Proc. 97-36 and Rev. Proc. 2001-23) — IRS
  10. [10]Rev. Proc. 2025-23 — List of automatic changes in method of accounting (§§15.02, 15.09, 23.03, 23.04, 23.08) — IRS
  11. [11]26 U.S.C. §472 — Last-in, first-out inventories — Legal Information Institute (Cornell Law School)
  12. [12]26 U.S.C. §1363 — Effect of election on corporation (§1363(d) LIFO recapture) — Legal Information Institute (Cornell Law School)
  13. [13]26 CFR §1.132-5 — Working condition fringes (§1.132-5(o), qualified automobile demonstration use) — eCFR
  14. [14]AM 2014-004 — Auto Dealer Facility Upgrade Programs — IRS Office of Chief Counsel
  15. [15]26 U.S.C. §453 — Installment method — Legal Information Institute (Cornell Law School)
  16. [16]26 U.S.C. §166 — Bad debts — Legal Information Institute (Cornell Law School)
  17. [17]T.D. 10054 — Car Loan Interest Deduction, 91 Fed. Reg. 57214 (Sept. 8, 2026) — Federal Register (GovInfo)
  18. [18]26 U.S.C. §30C — Alternative fuel vehicle refueling property credit — Legal Information Institute (Cornell Law School)
  19. [19]2026 General Instructions for Forms W-2 and W-3 — IRS
  20. [20]FS-2026-13 — Questions and answers about the deduction for qualified overtime compensation (August 2026) — IRS
  21. [21]29 U.S.C. §213 — Exemptions (Fair Labor Standards Act §13(b)(10)) — Legal Information Institute (Cornell Law School)

Figures and deadlines verified October 23, 2026

Start with a floor plan and LIFO review.

We review your last return, factory statement and floor plan agreement, then show where §163(j), bonus depreciation and LIFO stand for this year. Every project is scoped so the potential tax savings and financial clarity justify the cost of our fees — and if we don’t believe the math works in your favor, we’ll tell you before you engage.

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