During 2020, MVC Operated as a C Corporation

question 150

Essay

During 2020, MVC operated as a C corporation. However, it made an election to be taxed as an S corporation effective January 1, 2021. MVC uses the accrual method of accounting and uses the LIFO method of accounting for its inventory. At the end of 2020 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 2020 was $80,000. What amount of LIFO recapture tax must MVC pay? When must it pay the tax?

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Definitions:

Uniform Standards

Consistent and homogenous criteria or requirements that are applied across different units, processes, or entities to ensure quality and compliance.

Performance On-the-job

The extent to which an employee executes their assigned duties and responsibilities effectively within their workplace.

Organizational Citizenship

The voluntary commitment of members to go beyond the required duties, benefiting the organization and its members.

Counterproductive Workplace

Behaviors or environments within a workplace that hinder organizational performance, employee productivity, or both.