Top 2023 LIFO Election Locks
Learn about the best opportunities to obtain meaningful tax benefits from electing LIFO for the 2023 year end!
View full articleLIFO Financial Reporting Disclosure Requirements & Alternatives
What Rules Exist Regarding LIFO Disclosures for Financial Reporting Purposes? The IRS tax law commonly referred to as the “LIFO conformity rule” is the authoritative guidance that prescribes the financial report and statement requirements for companies that use the LIFO method (assuming financial reports or statements are issued to external parties; these rules are not […]
View full articleExploring Interim LIFO Estimate Approaches
Why do companies perform interim LIFO estimates? The dollar-value LIFO method is a calculation designed to be performed annually or one time each reporting period (this is the method used by the vast majority of companies using LIFO). Furthermore, IRS Regs. prescribes for LIFO to be applied annually & never mentions performing interim LIFO estimates […]
View full articleWhy Companies Use Different Book & Tax LIFO Methods
What is the LIFO Conformity Rule? IRS Reg. §1.472-2(e)(1) requires for taxpayers using the LIFO method to also do so for financial reporting purposes beginning in the year that LIFO is adopted for tax purposes (LIFO can be adopted for financial reporting purposes prior to the adoption for tax purposes, but not vice versa). What […]
View full articleHow the IPIC Method Could Maximize Your LIFO Reserve
What is the IPIC Method? Dollar-value LIFO method users are allowed to use an internal or external inflation measurement source to calculate inflation. Here’s an overview of these two methods: Internal indexes Current period’s quantities are double extended against current & prior period unit costs (prior period unit costs are used if the link-chain method […]
View full articleThe LIFOPro Difference
Our Clients Stay on LIFO Far Longer than Non-clients An internally developed study of publicly traded companies found that LIFOPro clients are far more likely to remain on LIFO than non-clients. More specifically, as of the 2011 year-end, there were 318 publicly traded companies on LIFO. Of the 318 companies were on LIFO as of […]
View full articleRecord Number of Companies Electing LIFO
What has Caused the Surge in First-time LIFO Elections? LIFOPro has seen a nearly 40% increase in first-time LIFO elections amongst new clients between 2021 – 2022. The primary cause of this record number of companies electing LIFO has been the highest inflation seen in 40 years over the last two years, which translated into […]
View full articleLIFO Election Essentials
LIFOPro’s LIFO Election Essentials What are the advantages of LIFO? It will reduce taxable income whenever there’s inflation (unless material inventory liquidation occurs) Most companies remain on LIFO once they elect because the benefits will continue to accrue & there’s no limit on how long you stay on LIFO or cap on the size of […]
View full articleLIFO Conformity for Foreign-Controlled Consolidated Groups with U.S. Subsidiaries
IRS Revenue Ruling 78-246 provides an exception to the LIFO conformity rule for foreign-controlled consolidated groups. The use of a non-LIFO method of calculating income, profit and loss in the consolidated statements of a foreign-controlled consolidated group even when one or more of the subsidiaries uses LIFO for U.S. income tax reporting is not in […]
View full articleTop 10 LIFO Election Locks of 2022
Exploring electing LIFO in 2022 is essential in certain industries because it’d be irresponsible to fail to do so. The inflation experienced in many industries this year will may never occur again in our lifetimes. In many cases, the benefits from electing LIFO in 2022 will create tax benefits that would normally take many years […]
View full articleTax Relief in Sight for Dealerships Suffering LIFO Recapture in 2020 – 2021
What is the Supply Chain Disruptions Relief Act? This bill was drafted to provide tax relief to new motor vehicle dealerships using the LIFO method who had qualified inventory liquidations solely attributable to supply chain disruptions that occurred between 2020 – 2021, which in turn caused LIFO recapture & increased tax liabilities to be recognized […]
View full articleHow LIFO Works: A Beginner’s Guide to LIFO
Download PDF Guide Why Use LIFO? Tax Benefits LIFO often creates material long-term tax deferral/savings: Not just a one-time tax benefit or timing difference between book & tax such as straight-line vs. accelerated depreciation During periods of rising costs, LIFO: Provides more after-tax free cash flow than non-LIFO methods when there’s inflation Ensures taxes aren’t […]
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