During 2017,MVC Operated as a C Corporation

question 28

Essay

During 2017,MVC operated as a C corporation.However,it made an election to be taxed as an S corporation effective January 1,2018.MVC uses the accrual method of accounting and uses the LIFO method of accounting for its inventory.At the end of 2017 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 2017 was $5,000.What amount of LIFO recapture tax must MVC pay? When must it pay the tax?

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Definitions:

Finished Goods

These are products that have completed the manufacturing process and are ready for sale to customers.

Managerial Accounting Report

Detailed reports that provide managers with financial information and analysis used for decision-making and operational control.

Production Equipment

Tools and machinery used in the production process to manufacture products or provide services.

Factory Overhead

The indirect costs associated with manufacturing, excluding direct materials and direct labor expenses.