During 2019, MVC Operated as a C Corporation

question 128

Essay

During 2019, MVC operated as a C corporation.However, it made an election to be taxed as an S corporation effective January 1, 2020.MVC uses the accrual method of accounting and uses the LIFO method of accounting for its inventory.At the end of 2019 its inventory basis under the LIFO method was $63,000.If MVC had used the FIFO method of accounting for its inventory, it would have had a $70,000 basis in its inventory.Finally, MVC's regular taxable income in 2019 was $80,000.What amount of LIFO recapture tax must MVC pay? When must it pay the tax?

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Definitions:

Scheduled Transactions

Transactions that have been arranged to occur at a specific, predetermined time, such as automated bill payments or regular financial transfers.

Recurring Transactions

Transactions that are automatically processed on a scheduled basis, such as monthly bills or subscription fees.

Unscheduled

Not planned or without a predetermined timetable; occurring without a specific schedule in advance.

Reminder

A tool or notice designed to prompt an individual or group about a task or event that is due or needs attention.