Supply Chain Disruptions Relief Act
Bill: S.4105 | Sponsor: Sen. Brown, Sherrod (D-OH)
Policy area: Taxation

Summary:
Supply Chain Disruptions Relief Act
This bill modifies the treatment of liquidations of new motor vehicle inventory as qualified LIFO (last in first out accounting method) inventory. It allows new motor vehicle dealers to elect to wait until the end of 2025 to replace their inventory for purposes of determining income attributable to the sale of such inventory during 2020 and 2021.

To treat certain liquidations of new motor vehicle inventory as 
 qualified liquidations of LIFO inventory for purposes of the Internal 
                         Revenue Code of 1986.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Supply Chain Disruptions Relief 
Act''.

SEC. 2. TREATMENT OF CERTAIN LIQUIDATIONS OF NEW MOTOR VEHICLE 
              INVENTORY AS QUALIFIED LIQUIDATIONS OF LIFO INVENTORY.

    (a) 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.
    (b) Additional Relief.--
            (1) 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--
                    (A) to not recognize any income in the specified 
                taxable year which is solely attributable to such 
                qualified liquidation, and
                    (B) 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--
                            (i) the first taxable year after such 
                        liquidation with respect to which such dealer 
                        does not inventory new motor vehicles under the 
                        LIFO method, or
                            (ii) the last taxable year ending before 
                        January 1, 2026.
            (2) 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--
                    (A) 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
                    (B) interest thereon at the underpayment rate 
                established under section 6621 of such Code.
            (3) Elections.--
                    (A) 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.
                    (B) 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.
    (c) Definitions.--For purposes of this section--
            (1) Specified taxable year.--The term ``specified taxable 
        year'' means any liquidation year ending after March 12, 2020, 
        and before January 1, 2022.
            (2) New motor vehicle.--The term ``new motor vehicle'' 
        means a motor vehicle--
                    (A) which is described in section 163(j)(9)(C)(i) 
                of the Internal Revenue Code of 1986, and
                    (B) the original use of which has not commenced.
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury or the Secretary's delegate.
            (4) 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.

            Passed the Senate December 22, 2022.

            Attest:

                                                             Secretary.
117th CONGRESS

  2d Session

                                S. 4105

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