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Discussion
I. Examples
Before reaching our analysis of the applicable law, we set
forth some examples of the accounting, tax, and financial aspects
of the case at bar that will elucidate the facts of the case.
The parties have stipulated the following examples.
A. Dealer Finance Income
Suppose that when GMAC's buy rate was 8 percent a retail
customer entered into an RISC with a principal amount of $10,000,
for a term of 48 months, bearing an interest rate of 8.25
percent. GMAC paid or credited $10,04822 (the fair
market/discounted value of the RISC at 8 percent) to the
independent GM dealer for assignment of the RISC to GMAC. Thus,
the independent GM dealer received $48 of dealer finance income
(the fair market value of the RISC--$10,048--less the principal
amount--$10,000).
B. Retail Rate Support Payment Calculations
1. Pre-1985
Suppose a retail customer purchased a vehicle from an
independent GM dealer for $12,000 and paid $2,000 in cash and
financed the $10,000 balance with a rate-supported RISC with a
48-month term. The retail rate support program offered 7.9
22 For convenience, all figures are rounded to the nearest
dollar.
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