SECTION 6. DRAFTING

INFORMATION

The principal author of this revenue procedure is Bernard P. Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding the depreciation limitations and lessee inclusion amounts in this rev

March 24, 2008 663 2008–12 I.R.B.

and amplified by Rev. Proc. 2002–19, 2002–1 C.B. 696, and as amplified, clarified and modified by Rev. Proc. 2002–54, 2002–2 C.B. 432. .08 Under the “Alternative LIFO Method” provided in Rev. Proc. 97–36 and listed in section 10.03 of the APPENDIX of Rev. Proc. 2002–9, a retail dealer of new cars or new trucks (“automobile dealer”) must establish one pool for all new cars and a separate pool for all new light-duty trucks (two-pools rule). For this purpose, “light-duty truck” means a truck with a gross vehicle weight that does not exceed 14,000 pounds. These light-duty trucks sometimes are referred to as “class 1,” “class 2,” and “class 3” trucks. .09 Under the “Used Vehicle Alternative LIFO Method” provided in Rev. Proc. 2001–23, 2001–1 C.B. 784, as modified by Announcement 2004–16, 2004–1 C.B. 668, and listed in section 10.04 of the APPENDIX of Rev. Proc. 2002–9, a reseller of used cars or used light-duty trucks (“used vehicle dealer”) must establish one pool for all used cars and a separate pool for all used light-duty trucks (two-pools rule). Again, “light-duty truck” means a truck with a gross vehicle weight that does not exceed 14,000 pounds ( i.e., class 1, class 2, or class 3 truck). Furthermore, “used car” and “used light-duty truck” mean previously titled vehicles, excluding demonstrator vehicles. A taxpayer may choose to assign a used sport-utility vehicle (“SUV”) or a used “hybrid” vehicle ( e.g., van and minivan) to either its used car pool or its used light-duty truck pool. Once the taxpayer has assigned one used SUV or one used hybrid vehicle to a pool, the taxpayer must assign all used SUVs and all used hybrid vehicles to that same pool in subsequent years.

.10 The two-pools rule found in both Rev. Proc. 97–36 and Rev. Proc. 2001–23 is based on the opinions in Fox Chevrolet, Inc. Maryland v. Commissioner, 76 T.C. 708 (1981), acq ., 1984–2 C.B. 1, in which tax years from 1972 through 1974 were at issue, and Richardson Investments, Inc., and Subsidiaries v. Commissioner, 76 T.C. 736 (1981), in which tax years 1971, 1972, and 1974 were at issue. After acknowledging the similarities of cars and trucks, the court in Fox Chevrolet focused on their differences in deciding that cars and trucks do not constitute a single class of goods under § 1.472–8(c)(1). First, the court noted that

26 CFR 601.204: Changes in accounting periods and in methods of accounting. (Also Part I, §§ 446; 472; 1.446–1; 1.472–1; 1.472–8.)

Rev. Proc. 2008–23