Inflation Can Create Tax Opportunities
America has not seen double digit inflation since 1980. While we are still far from double digits, the 7% inflation rate in 2021 was twice what it has been over the last 30 years. Economists don’t agree on whether this inflationary trend will continue into 2022 and beyond, but most feel that it will at least be higher than in recent history.
LIFO Inventory Valuation Method
LIFO, (Last In First Out) is a method of accounting used to value inventory. If a business uses LIFO, then it can deduct the cost of the most recently acquired inventory as part of Cost of Goods Sold when it sells an item of inventory. This allows the more expensive inventory to be expensed first. Normally, a business uses FIFO (First In First Out) or a weighted average method of valuing its inventory. In an inflationary period, these methods will result in a lower deduction as inventory is sold because the older, less costly inventory is expensed first.
Please watch this video by Susan Roberts and Adam Mleziva, as they discuss electing LIFO, the mechanics of making the election, and when a business may be a good candidate for the change.
Allyson works for businesses of all sizes, maintaining a primary focus on business tax and consulting. She provides her clients with creative resolutions for technical tax issues and clearly interprets proposed and existing business tax law. Moreover, her thorough experience with trusts and estates allows her to deftly guide clients through the complicated legislation and the intricate processes involved in compliance, maximization of returns, and sustaining business and family wealth. She first gained knowledge and experience working for several years in a national firm, in a small firm environment, and in solo practice. She was also a partner in a regional legacy firm for 15 years prior to joining CLA. Her extensive tax experience bolsters CLA's talented staff and cultivates client relationships and makes her an invaluable member of the professional and civic communities.
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