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Changing Inventory Methods
01/16/09 11:45am PST
Total Views: 468
Total Views: 468
What is required to change inventory methods from cost to lower of cost or market?
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Answer
01/23/09 6:48pm PST
Changing the method or basis used to value inventory is one of the three major changes that requires IRS consent. The other two are changing from cash method to an acrrual basis (and vice versa), and a change in depreciation method. The above changes can be used to manipulate taxable income, so IRS regards them as Changes in Accounting Method.
You need to fill out and submit Federal Form 3115 (Application for Change in Accounting Method) to seek IRS consent before you can switch to the new method. Good Luck.
