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:

Contest a Will

A legal challenge made against the validity of a will by a potential heir or beneficiary.

Holographic Will

A will entirely handwritten and signed by the testator, often not witnessed, but recognized as valid in some jurisdictions.

Attested

Verified or certified as true, accurate, or genuine by a witness or authority.