In the case of a change from the lower-of-cost-or-market FIFO to the LIFO inventory method:
A) The taxpayer may make the change when the tax return is filed without seeking the IRS's permission for the change.
B) The taxpayer must revalue the beginning inventory from lower-of-cost-or-market to actual FIFO cost.
C) The adjustment due to the change in accounting method must be spread over 3 years, the year of change and the two subsequent years.
D) All of the above.
E) None of the above.

Question

Quizplus · Accepted Answer

The taxpayer may make the change when the tax return is filed without seeking IRS permission for the change; however, the beginning inventory must be revalued from lower-of-cost-or-market to actual FIFO cost, and the adjustment must be spread over 3 years, including the year of change and the two subsequent years.

In the Case of a Change from the Lower-Of-Cost-Or-Market FIFO