Which of the following statements is true?

Question

Quizplus · Accepted Answer

A change in capitalized inventory costs under §263A can result in either an increase or decrease in a deferred tax asset, depending on the specifics of the change. For example, a change in inventory methods or an adjustment in the cost basis of inventory can affect the amount of capitalized costs, which in turn affects the deferred tax asset. Therefore, statement A and B are incorrect. The statement D is incorrect because a change in capitalized inventory costs under §263A may or may not result in a permanent difference depending on whether the reversal of the temporary difference will occur in the future or not.

Which of the Following Statements Is True