Unfortunately, no. Most have interpreted the §263A regulations to mean that dealers are subject to §263A; however, prior to the issuance of TAM 200736026, many dealerships thought that if they did not have off-site storage and purchasing activities consumed less than 1/3 of people’s time, the §263A calculation performed would result in zero additional costs being capitalized.

The IRS set forth guidance on a proper methodology in the TAM. Unfortunately, it still leaves many unanswered questions thus the extension of the audit moratorium. We understand the Service is working on a more comprehensive Revenue Procedure that would resolve the present ambiguities. Until then, most dealers and their CPAs are holding off moving to any different method.