Which of the Following Statements Is Correct

question 42

Multiple Choice

Which of the following statements is correct?

• A) The LIFO recapture tax precludes an S corporation from using the LIFO method.
• B) The LIFO recapture tax is paid in five annual installments.
• C) The LIFO recapture amount increases the corporation's adjusted basis in its inventory.
• D)The LIFO recapture tax does not apply to S corporations with no earnings and profits from prior C corporation years.
• E)None of these

---

Definitions:

Scrotum

A pouch of skin containing the testicles and parts of the spermatic cords, playing a role in regulating their temperature.

Epididymis

A tightly coiled tube located at the back of the testicle where sperm matures.

Inguinal Hernia

A condition where soft tissue protrudes through a weak point in the abdominal muscles near the groin.

Abdominal Muscles

A group of muscles in the abdomen involved in the movement and support of the torso and important for posture and respiratory functions.