1. Short title
This Act may be cited as the “Supply Chain Disruptions Relief Act”.
Supply Chain Disruptions Relief Act
A BILL
To treat certain liquidations of new motor vehicle inventory as qualified liquidations of LIFO inventory for purposes of the Internal Revenue Code of 1986.
2. Treatment of certain liquidations of new motor vehicle inventory as qualified liquidations of LIFO inventory
In general— In the case of any dealer of new motor vehicles which inventories new motor vehicles under the LIFO method for any specified taxable year, the requirements of paragraphs (1)(B) and (2) of section 473(c) of the Internal Revenue Code of 1986 shall be treated as satisfied with respect to such inventory for such taxable year.
Additional relief—
In general— The Secretary shall, not later than the date which is 90 days after the date of the enactment of this Act, prescribe regulations or other guidance under which dealers of new motor vehicles with a qualified liquidation (determined after application of subsection (a)) of new motor vehicles for any specified taxable year may elect—
to not recognize any income in the specified taxable year which is solely attributable to such qualified liquidation, and
to treat the replacement period with respect to such liquidation as being the period beginning with the first taxable year after such specified taxable year and ending with the earlier of—
the first taxable year after such liquidation with respect to which such dealer does not inventory new motor vehicles under the LIFO method, or
the last taxable year ending before January 1, 2026.
Failure to fully replace liquidated vehicles during replacement period— If, as of the close of the replacement period, the taxpayer has failed to replace all liquidated vehicles with respect to a qualified liquidation to which paragraph (1) applies, the taxpayer shall increase gross income for the last taxable year of the replacement period by the sum of—
the aggregate amount of income that would have been required to be recognized in the liquidation year had the taxpayer elected to apply the provisions of section 473 of the Internal Revenue Code of 1986 and not made the election in paragraph (1), plus
interest thereon at the underpayment rate established under section 6621 of such Code.
Elections—
In general— Except to the extent provided in subparagraph (B), an election under paragraph (1) with respect to any specified taxable year shall be made by the due date (including extensions) for filing the taxpayer’s return of tax for such taxable year and in such manner as the Secretary may prescribe. Once made, any such election shall be irrevocable.
Certain elections treated as change in method of accounting— In the case of an election with respect to a specified taxable year for which the return of tax has already been filed before the date of the enactment of this Act, any election under paragraph (1) for such specified taxable year may be made on the return of tax for the first taxable year ending after the date of the enactment of this Act and shall be treated for purposes of section 481 of the Internal Revenue Code of 1986 as a change in method of accounting initiated by the taxpayer and made with the consent of the Secretary.
Definitions— For purposes of this section—
Specified taxable year— The term “specified taxable year” means any liquidation year ending after March 12, 2020, and before January 1, 2022.
New motor vehicle— The term “new motor vehicle” means a motor vehicle—
which is described in section 163(j)(9)(C)(i) of the Internal Revenue Code of 1986, and
the original use of which has not commenced.
Secretary— The term “Secretary” means the Secretary of the Treasury or the Secretary’s delegate.
Other terms— Except as otherwise provided in this section, terms used in this section which are also used in section 473 of the Internal Revenue Code of 1986 shall have the same meaning as when used in such section 473.