Most dealers are on the NEW VEHICLE LIFO INVENTORY method which reduces and/or defers income taxes. With many dealers having much less new inventory now than at the end of 2018 and/or 2019, many will have an unexpected LIFO profit in 2020. What can you do to minimize this problem?
Do not enter in your accounting records the sale of new vehicles where the vehicle has not been paid for in full in 2020 by the customer and there is still needed paperwork from the customer to finalize the deal. If there is a year-end factory rebate/incentive, read the factory program carefully. For many end of the program is the 2nd, 3rd, or 4th day of January and you do not want to lose any rebates by carrying a deal into 2021.
Keep your new vehicle purchase journal open into January to purchase any new vehicles that come in early January 2021 or just the factory invoice comes in early January where the vehicle was built in 2020.
These two suggestions should help you increase your year end new inventory that might help your LIFO.