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What are the implications of changing the valuation method of an item from FIFO Perpetual to LIFO Perpetual? What happens if there is a receipt for an item that is only partially sold?
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Hi Richard,
As a former Tax Director I can tell you a Form 3115 would need to be filed before any such change could be made for tax purposes. Along the line of how the IRS wants you to do it you have a change in accounting method and you would have to figure the value that would have been vs the value that is. I'm feeling that is not what you're asking.
System-wise GP would just take whatever you have as the cost as gospel and go forward. Your FIFO layer would turn into a LIFO layer. The cost of your previously sold items would not change. The cost of the inventory unsold would not change.
Kind regards,
Leslie
Leslie, that is exactly why I threw this question out to the group. I knew there would be some type of tax implication along with the ramifactions in GP. Thank you so much for that and I wil alert them to the paperwork involved. Your replies are always spot on!
Have you ever had a client who wants to have some items LIFO and some item FIFO? How do you handle that from a tax standpoint?
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