Lent Corporation converts to S corporation status in 2019. Lent had been using the LIFO inventory method and held a LIFO inventory value of $510,000 (FIFO value of $650,000). How much tax must be added to the C corporation tax liability for the year before the S election in 2020?

Question

Quizplus · Accepted Answer

The LIFO recapture amount is $140,000 ($650,000 - $510,000). The tax on this amount is $29,400 ($140,000 x 21%).

Lent Corporation Converts to S Corporation Status in 2019