Bob Wondries Motors, Inc. v. Commissioner

Bob Wondries Motors, Inc., Toyota Town, Inc., Wondries Nissan, Inc., Country Nissan, Quality Motor Cars of Stockton, Bob Wondries Associates, Inc., Robert S. Zamora and Christina Zamora (taxpayers) appeal the Tax Court’s decision upholding tax deficiencies assessed by the Commissioner of the Internal Revenue Service. 1 Taxpayers are automobile dealerships that deferred part of their prepaid services income from sales of extended warranty agreements, and they question whether they were also required to amortize related insurance expenses from the date of inception of the insurance policies insuring their obligations under the warranty agreements rather than from the first day of the year in which the policy was acquired, as the Commissioner determined and the Tax Court upheld. 79 T.C.M. (CCH) 1457 . They also challenge the Tax Court’s refusal on the ground of waiver to consider their argument that income from the sale of the extended war *1158 ranty agreements should not have been included in income. We agree with the Tax Court on both issues, and affirm.

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Taxpayers are retail automobile dealers. 2 During the years in issue, they offered to sell an extended warranty…