During 2019, MVC Operated as a C Corporation

question 69

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 $80,000.If MVC had used the FIFO method of accounting for its inventory, it would have had a $100,000 basis in its inventory.Finally, MVC's regular taxable income in 2019 was $5,000.What amount of LIFO recapture tax must MVC pay? When must it pay the tax?

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Definitions:

Sensation

Processing of sensory stimuli that involves detection of nerve impulses by the cerebral cortex of the brain.

Voluntary Control

The ability to consciously control bodily movements, as opposed to involuntary movements which occur without conscious choice.

Broca's Area

A region in the frontal lobe of the dominant hemisphere (usually the left) of the brain with functions linked to speech production.

Brain Damage

Injury to the brain that impairs its functions, potentially leading to cognitive, physical, emotional, or behavioral impairments.