• Record December finance chargebacks.
• Keep your accounts payable journal open to record all 2014 expenses in 2014 including advertising, interest, utilities, telephone, gasoline, data processing, insurance, etc.
• If any vehicle deal is not a 100% completed deal (all paperwork and funding in 2014), then treat it as a 2015 vehicle sale.
• Make sure all miscellaneous inventories are adjusted to actual, including labor inventory, sublet, gas-oil-grease, body shop materials, etc.
• Reconcile, when possible, all balance sheet accounts before closing the year.

2. You must include a reasonable estimate of your LIFO adjustment for the year on all versions of your December financial statements. There are no exceptions. If there is not a separate LIFO cost of sales account, charge the LIFO estimate to cost of sales in a cost account that has no other activity. 

3.  If you are not on LIFO for used vehicles, adjust all of your used vehicles to the lower of recorded cost or current wholesale market value at year-end.

4. Compare your actual parts inventory to the accounting parts inventory and make adjustments where appropriate. Have your parts manager determine which parts should be considered worthless. Subject to your review, dispose of these parts by year-end. Be sure that your parts manager advises the office manager of the cost of the disposed parts and that the appropriate entry is made to remove the costs from inventory. Your parts manager should provide you with a final parts inventory summary showing the dollar amount of parts in inventory at the end of the year along with an aging of that inventory.

5.  If you have any building repair or maintenance items (such as painting, lot repairs, etc.) that needs to be done, try to have these performed by the end of 2014.

6.  Review current year fixed asset additions to determine if the costs should be capitalized or expensed as repairs. Repairs are items that do not add significant value to the property, prolong the life of the property or adapt the property to a new or different use.

President Obama has just signed a measure that extends the 50% bonus depreciation deduction for new business equipment acquired and placed in service in 2014. The measure also extends the Section 179 Expensing to $500,000 for certain assets and equipment purchased in 2014. These extenders can be applied retroactive to January 1, 2014.

7. Carefully review prepaid assets and expense all items in this account that are not valid as prepaid at year end.

8.  Review all past due accounts receivables, including employee receivables. Write off those receivables that are not collectible. If any of these are from former employees, issue them a Form 1099-C for the amount written off.

9. Review bank reconciliations for checks (including payroll checks over 60 days old) that are not expected to clear. These checks should be voided and reissued. Funds owed to payees who cannot be located may be considered unclaimed property which would require you to remit the funds to the state. Before reissuing a check to a vendor, be sure that it has not been paid with a subsequent billing. Be careful when voiding any checks written to the state because some state departments are slow in processing.

10. All payroll tax and sales tax payable accounts must equal the actual amount of the applicable taxes paid in 2015 for the 2014 fourth quarter and year-end filings. The year-end payroll tax accrual can only include taxes owed on wages actually paid in 2014.

11. Confirm you have substantiation for your 2014 meal and entertainment expenses. Travel expenses and the cost of a holiday party for employees or food ordered in to the dealership should not be included in this amount, as these are fully deductible.

12.  Form 8300 must be filed if you receive cash in excess of $10,000 from a customer. Cash includes certain cashier's checks, money orders, and traveler's checks. Make sure you have properly filed the form for each transaction and notified the customer of the filing. Ask your office staff to provide you with copies of the forms filed for 2014 so you confirm that this function is being performed.

13.  IRS Form 1099-MISC must be issued to all non- employees and businesses that are not incorporated (including LLCs) and received $600 or more during 2014 for payment of services, awards, commissions, or fees for services. A Form 1099-MISC must be issued for payments to an attorney even if they are incorporated. Review all of the non-employee activity and determine if they should really be considered employees for payroll tax purposes.

14.  All wages and commissions paid in 2015 for 2014 services should be accrued in 2014. Also, make sure the first payroll in 2015 (even though some portion of the payroll was for 2014 services) is not included on your W-2s for 2014, but will instead be on the W-2s for 2015. If you are an S Corporation, wages cannot be accrued for shareholders and their family members. In order to take a 2014 deduction, you must pay them in 2014 and include the wages on the 2014 W-2.

15.  If you are a C corporation, make sure you pay any salaries, commissions, or bonuses to stockholders and related parties in December (if their ownership exceeds 50%) in order to take a 2014 deduction. Make sure they are reasonable in total. All accrued payroll for non-shareholders must be paid no later than March 15, 2015 for it to be deductible in 2014.

16. Accrued interest should be paid before year end on loans from shareholders and other related parties in order for the interest to be deductible in the current year. IRS Form 1099-INT must be issued for the paid interest. Also, Form 1099-MISC must be issued for all rents paid to individuals during the year reporting the rent paid in Box 1.

17.  Review procedures for the use of demonstrators to ensure you comply with the current IRS regulations.

• All individuals who are provided a demo to drive should sign a written demonstrator policy agreement.
• There are two IRS approved methods that can be used for full-time salespeople. The first method provides them with tax-free use of the demo. This method is fairly complicated and restrictive. The second method, used by most dealers, is the partial exclusion method. Under this method, an amount is added to wages on a monthly basis. The IRS has provided daily income amounts based on the value of the vehicle. For example a vehicle valued at $25,000, the daily inclusion is $6.00. Under this method, employees are not required to maintain logs.
• For employees who are not a full-time salesperson and any other individuals who drive a demo, the annual lease value method is used. The amount included in income is based on personal-use mileage and the IRS annual lease table. The IRS requires that logs be maintained in order to verify business versus personal use of the vehicle.
• The amount included in income is to be added to each employee's W-2. Non-employee family member income amounts must also be included in the employee's W-2. Shareholders, not on the payroll who provide services to the company and any other non-employees, must be issued a Form 1099-MISC for the income.
• Remember, amounts included in income should be reduced by any payroll deductions for personal use of company vehicles.

18.  If you plan to make any charitable contributions, consider making them in 2014 to receive a current-year deduction. The IRS requires written acknowledgment for each contribution of $250 or more.  

19.  If the dealership has a section 125 plan (cafeteria plan), make sure eligible employees complete the 2015 election forms before the first 2015 payroll. Remember, stockholders owning more than 2% in S corporations (LLCs, etc.) are not eligible to participate.  

20.  W-2s for S corporation shareholders must include income for health insurance premiums paid by the corporation. This amount is not subject to social security or Medicare tax.  

21.  If your retirement plan allows changes throughout the year, maximize your deductible contributions: $17,500 for a 401(k) plan (and $23,000 if over age 50), and $52,000 to profit sharing plans (net of any 401(k) contributions). If you have self-employment income, consider establishing a Keogh plan. You have until the due date of your return, including extensions, to fund the contribution.  

22.  Be sure you are in compliance with Internal Revenue Service rules and regulations regarding a backup of each month's accounting records on electronic media. We suggest you keep 60 months of electronic backup of your accounting data.  

23.  Consider adopting IRS "TRADE Discounts" that deals with factory "interest credits" and "advertising credits." This procedure will assist in reducing dealership income taxes. This might be worthwhile if you have a large enough new vehicle inventory.