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:

Redness

A sign of inflammation or increased blood flow to a specific area, often observed as part of the body's response to injury or infection.

Heat

A form of energy that is transferred between systems or objects with different temperatures, moving from the system of higher temperature to the system of lower temperature.

Pain

An unpleasant sensory and emotional experience associated with actual or potential tissue damage, or described in terms of such damage.

Swelling

The enlargement or distention of a part of the body as a result of inflammation or accumulation of fluid.