Lent Corporation converts to S corporation status in 2018. 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 2019.

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Quizplus · Accepted Answer

The LIFO recapture amount is the difference between the FIFO and LIFO inventory values, which is $650,000 - $510,000 = $140,000. This amount is added to the C corporation tax liability for the year before the S election in 2019.

Lent Corporation Converts to S Corporation Status in 2018