FROM THE OFFICE OF PUBLIC AFFAIRS January 22, 2003KD-3785 FOR BEBUILDABLE MOTOR VEHICLE PARTS Today the Treasury Department and the Internal Revenue Service issued guidance that provides a safe harbor method of accounting for the valuation of a taxpayer's inventory of rebuildable motor vehicle parts under the lower of cost or market (LCM) inventory valuation method. In the remanufacturing industry rebuildable used or worn parts that will be remanufactured are referred to as "cores." The guidance provides taxpayers : • A safe harbor method of determining the cost for cores in ending inventory. • A safe harbor method of determining the market value of cores in ending inventory. • A procedure for taxpayers currently using the LCM method to obtain automatic consent to change to the safe harbor method. • A procedure for qualifying remanufacturers and resellers not currently using the LCM method to obtain automatic consent to change to the LCM method in conjunction with a change to the safe harbor method. The guidance was released as part of the Industry Issue Resolution (IIR) program. It reduces long-standing controversy between the IRS and taxpayers in the motor vehicle remanufacturing industry. |
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