No More Life for LIFO?
Last-in, first-out inventory method faces several challenges to its continued existence. Congress in a period of deficit reduction eagerly eyes the close to $1billion in tax revenue from just the construction industry which would come if LIFO's place in the IRC was repealed and LIFO reserves of nearly $3 billion were subject to recapture. Additionally, present IFRS standards make no provision for LIFO, thus financial statements would have to be restated because of the IRS's conformity rule for LIFO.
There is a theoretical case for LIFO in inflationary times; because it assumes sales of goods most recently priced it provides the most accurate measure of income if inflation is significant and inventory changes little if at all from year to year. This nonwithstanding, it looks like LIFO will soon go the way of pooling of business combinations and the political contribution tax credit.
There is a theoretical case for LIFO in inflationary times; because it assumes sales of goods most recently priced it provides the most accurate measure of income if inflation is significant and inventory changes little if at all from year to year. This nonwithstanding, it looks like LIFO will soon go the way of pooling of business combinations and the political contribution tax credit.
posted by Dan Meyer at 10:46 PM
2 Comments:
There used to be a political contributions tax credit?!?
The political contribution credit (a small amount, maximum about $100 MFJ) existed about 1973-86 and was killed off by the Tax Reform Act of 1986. I wrote my doctoral disseration on this credit.
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