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    Dealership Tax Services

    Tax planning for dealers, from people who speak fluent dealership.

    A few tax decisions carry more weight for a dealership than everything else combined:

    • How floor plan interest interacts with the business interest limitation and bonus depreciation
    • How the store, the real estate, and any reinsurance company are structured relative to each other
    • Whether the transition to the next generation has a real plan behind it

    Each one has a right answer that depends on your situation, and each is expensive to get wrong. Larson's dealership tax team has worked with dealer principals for more than 30 years, and second-generation expertise runs through the practice. We plan with you year-round, while the decisions can still change the outcome.

     

    Talk to our dealership tax team

    Floor Plan Interest and the Section 163(j) Limitation

    The business interest limitation treats floor plan financing differently from any other industry. Floor plan interest can be deducted in full outside the limitation. When that treatment is used, though, the business can lose eligibility for bonus depreciation on its property.

    For a dealer planning facility or equipment investments, that tradeoff can move real money in either direction. The One Big Beautiful Bill Act's return to an EBITDA-based limitation calculation also changes the math for many stores. This decision should be modeled each year against your actual capital plans. Our overview of Section 163(j) changes under the OBBBA walks through the rules.

    Entity Structure for Dealer Groups

    How your entities are organized affects tax, liability, and eventual sale value. That applies across the store, the real estate, F&I income, and any reinsurance arrangement. Common questions we work through:

    • Should the real estate sit in a separate entity, and how is rent set between related parties?
    • Should multiple rooftops be held in one entity or several?
    • How are dealer-owned (DORC) and producer-owned (PORC) reinsurance companies structured, taxed, and reported? This includes how the IRS's micro-captive regulations may apply.
    • What are the basis and distribution consequences of S corporation versus partnership treatment?
    • How does state apportionment work when stores cross state lines?

    Structures set up at formation often stop fitting as the group grows. Revisiting them is worthwhile, and because restructuring carries its own tax consequences, we model the change first.

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    Dealer Succession and Exit Planning

    For most dealer principals, the store and the real estate make up most of their net worth, and the intended path is a family transfer.

    That planning takes years. It covers:

    • A valuation baseline and the gap between today's value and what you need
    • Gifting and transfer strategy
    • Buy-sell agreement structure and funding
    • How the real estate transfers relative to the operating company
    • The tax consequences of a family transfer compared with a third-party sale

    Manufacturer approval of ownership changes adds a layer most industries don't have, so we build it into the plan from the start.

    If a sale is the more likely path, preparation matters just as much. Buyers and their advisors know exactly which numbers to examine, and the moves that increase your after-tax proceeds generally take several years to execute.

     

    Ongoing Dealership Tax Compliance

    We prepare federal and state returns for the operating entities, the real estate entities, and the owners. That includes quarterly estimates and coordination between the business and personal returns. We handle multistate filing when your group crosses state lines, plus sales and use tax questions specific to vehicle sales, service, and parts.

    Dealership Tax FAQs

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    Is a cost segregation study worth it for our facility?

    It's usually worth evaluating for owned dealership real estate, especially after a build or renovation. We can give you a preliminary view before you commission a study.

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    We have a reinsurance company. Can you handle that?

    Yes. Our dealership tax team works alongside our captive insurance practice, which serves more than 200 captive entities nationwide.

     

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    We're thinking about selling in a few years. When should we involve you?

    Now. The moves that matter most take years to put in place.

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    Can you handle just the tax side while we keep our current accountant?

    Yes. Tax planning works best with a view of your monthly numbers, so we coordinate closely with your accountant.

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    Do you work with dealers outside Utah?

    Yes. Utah dealers are the core of our practice, and we can serve dealer groups in other states as well.

     For dealership tax questions, contact Carl Jensen, tax partner. 

    Talk to Our Dealership Tax Team

    Tell us how many rooftops you have, whether you own your real estate, and your timeline for a transition. Those four answers shape most of the conversation.

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