During 2016, MVC Operated as a C Corporation

question 6

Essay

During 2016, MVC operated as a C corporation. However, it made an election to be taxed as an S corporation effective January 1, 2017. MVC uses the accrual method of accounting and uses the LIFO method of accounting for its inventory. At the end of 2016 its inventory basis under the LIFO method was $63,000. If MVC had used the FIFO method of accounting for its inventory, it would had a $70,000 basis in its inventory. Finally, MVC's regular taxable income in 2016 was $80,000. What amount of LIFO recapture tax must MVC pay? When must it pay the tax?

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Definitions:

NHS

The National Health Service (NHS) is the publicly funded healthcare system of the United Kingdom, providing a comprehensive range of medical services.

Polarity

A property of molecules having a distribution of charge leading to molecules having distinct positive and negative ends.

Carbon Monoxide

A colorless, odorless, and toxic gas consisting of one carbon atom and one oxygen atom, chemically represented as CO.

Polarity

A property of molecules having distinct ends with opposite charges, leading to unequal sharing of electrons.