Discussion:Average Cost Method for Tax
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| 2 May 2008 | |
| I am a CFO for a wholesale distribution company with an audit background. We value our inventory during the year on a moving average basis and adjust/revalue at the end of the year to a fifo basis. We are in the process of installing new software that will not provide for the year end fifo revaluation. This is acceptable to management and our auditors. For tax purposes, the tax accountants have indicated that we will need to file a 3115 requesting a change form fifo to average cost. Some initial research indicated that average cost is not an accceptable method for tax purposes. Any thoughts? | |
| 2 May 2008 | |
| My first question would be to your tax accountants. I would ask them and see what their response is. Personally, I am not sure of the answer at this point.
My other question would be what software did you purchase and with all the options available out there, couldn't you find one that could do this book to tax calculation? I ask, because I sell software. The answer might be available as an add on feature in the program, have you explored that? Also, if you can import export information out of the software, there are people out there than can inexpensively create a database and do this for you. Again, depends on the software and what your needs are. | |
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