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Update on LIFO Legislative Outlook

Posted 11:40 AM by

The LIFO Coalition recently provided an update on the legislative outlook as it relates to the continued existence of LIFO. LIFO, which stands for “last in, first out,” represents an inventory costing method which is utilized by manufacturing and distribution companies throughout the United States. In periods of rising costs, LIFO is a more accurate method of measuring financial performance and provides for a more favorable tax position. The tax benefits of LIFO have put its continued existence in question.

A recent report provided by the LIFO Coalition indicated that Congress is currently focused on determining whether to extend expiring (or expired) tax provisions (many of the tax cuts enacted in 2001 and 2003 are set to expire at the end of 2010). Once Congress has completed this process, the next step will be identifying opportunities to increase tax revenues to offset the tax losses generated by the extended tax provisions.  The repeal of LIFO would provide Congress with a significant increase in tax revenue to offset the revenue loss generated by extended tax provisions.

At this time, the LIFO Coalition has not received reports to suggest that LIFO has been discussed in this context. The LIFO Coalition will continue to monitor meetings on Capitol Hill as Congress will eventually be forced to turn to other tax measures and the repeal of LIFO is a likely target.

To learn more about the LIFO Coalition and their efforts, please visit their website. The LIFO Coalition is managed by the National Association of Wholesalers-Distributors.

About the Author
Jason Patch is a partner in Katz, Sapper & Miller’s Audit and Assurance Services Group and leads the firm’s Manufacturing and Distribution Services Group. Jason works with clients to ensure accurate financial reporting, keeping an eye on their bottom line, helping them avoid risk, and maximizing efficiencies. Connect with him on LinkedIn.

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