During 2013, MVC Operated as a C Corporation

question 44

Essay

During 2013, MVC operated as a C corporation. However, it made an election to be taxed as an S corporation effective January 1, 2014. MVC uses the accrual method of accounting and uses the LIFO method of accounting for its inventory. At the end of 2013 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 2013 was $5,000. What amount of LIFO recapture tax must MVC pay? When must it pay the tax?

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Definitions:

Sodium Citrate

A chemical compound used as a buffering agent, anticoagulant, or preservative in food and beverages.

EDTA

Ethylenediaminetetraacetic acid, a compound used to bind metal ions in various chemical and medical applications, including as an anticoagulant in blood samples.

Do Not Cleanse

A directive to avoid cleaning or washing an area or item, possibly to preserve evidence or maintain a specific condition.

Alcohol

A chemical substance found in drinks such as beer, wine, and spirits, known for its psychoactive effects and potential for dependence.