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:

Management by Reinforcement

A leadership approach that emphasizes the use of positive reinforcements to shape behavior and achieve desired outcomes.

Negotiations

The process of discussing terms and conditions between parties with the aim of reaching an agreement or compromise.

Performance Management Process

A systematic approach to improving and managing employee performance through set objectives, feedback, and evaluations.

Rewarding Positive

The process of providing positive reinforcement through rewards for desirable behaviors, encouraging their recurrence.