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Sucking the LIFO Out of Inventory

D oes the government see billons of potential tax revenue sitting on the shelves of your warehouse? LIFO allows companies to calculate the cost of goods sold based on the price of the most recently purchased ("last-in") inventory, rather than inventory that was purchased more cheaply in the past and has been sitting on the shelf. That boosts the cost of goods sold, which lowers profits — and, thus, taxable income. Congress dropped the plans to eliminate LIFO last year. However, the 2011 federal budget proposed by the Obama Administration again includes a provision to repeal LIFO accounting. For the full article on CFO magazine click here.

http://www.cfo.com/article.cfm/14508745/c_14509253?f=magazine_alsoinside