Tell me about how KGI complies with all of the new tax (IRS) rulings and the FASB situation?
A. With the government looking for more avenues to raise capital, this is an important consideration. You should speak with your own tax advisor, however the new rulings make doing an “in house” program very precarious. The IRS has been auditing Dealers all over the country and handing out large tax and penalty bills. If doing your own program, it is no longer legal to set aside money in a contingent liability fund without paying full corporate tax on the funds. In addition, you must pay tax on the entire sale as if income today, but take the costs over the term of the contract. KGI answers these IRS and FASB problems. KGI is a true insured program, with the Dealer’s check made payable to the insurer. We believe this procedure should enable you to handle this insurance premium in the same tax manner as any other insurance premium you pay during your normal course of business. The KGI Extended Service Contract Program will strive to be in compliance with all IRS and FASB requirements to
