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Fort Worth, TX 76107
817.732.5494

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Conformity - News Bulletin

The conformity issue that plagued auto dealers for so many years was settled -- Kudos went to to NADA's Peter Kitzmiller for his untiring and, ultimately, successful efforts. The solution, found in Rev. Proc. 97-44 and Rev. Rul. 97-42, required a bit of "self-audit", but it offered full relief without the cloud of uncertainty that had hung over the industry for so long.

The Revenue Ruling set guidelines for dealers:

A LIFO adjustment will have to be made on each 12th and 13th statement to the manufacturer(s). (It is important to note that a dealer cannot cure a conformity violation in the future by filing a 13th statement. The language in the ruling relating to curing an omission on the 12th statement with the filing of a 13th statement was for purposes of the look-back period only.)
The LIFO adjustment can be made in any account as long as it impacts the calculation of net income on the income statement
Dealers do not have to make the actual LIFO adjustment on the 12th statement; a reasonable estimate will satisfy the conformity rule.
Fiscal year end taxpayers can make the LIFO adjustment on their fiscal year end statements or their December statement. They do not have to make adjustments on both.

If you have any questions about conformity, please do not hesitate to call us at 817.732.5494.