During 2018, MVC Operated as a C Corporation

question 115

Essay

During 2018, MVC operated as a C corporation. However, it made an election to be taxed as an S corporation effective January 1, 2019. MVC uses the accrual method of accounting and uses the LIFO method of accounting for its inventory. At the end of 2018 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 2018 was $5,000. What amount of LIFO recapture tax must MVC pay? When must it pay the tax?

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Definitions:

Zoning Officer

A municipal official responsible for enforcing local zoning regulations, ensuring land and buildings are used in compliance with planning laws.

Deceit

The act of deceiving someone by concealing or misrepresenting the truth.

Zoning By-Laws

Regulations enacted by municipalities controlling the use of land and buildings, specifying types of buildings allowed in particular areas.

Physical Injury

Bodily harm caused by external force or action, which can include cuts, fractures, burns, or internal damage.