TO THE EDITOR:
Many dealers using the last-in, first-out method for valuing their inventories are facing unexpected high tax bills this year. This is resulting from the combination of lower year-end inventories and the recapture of their LIFO reserves.
There is an obscure tax provision — Section 473 — which could provide relief for some of these dealers. Efforts are being pursued to convince the Treasury/IRS to provide alternative safe harbor calculation relief. Dealers and their certified public accountants should be aware of these requests, but there is nothing specific to report at this time on this development.
Since tax returns will be due soon, there is no harm in including an election requesting relief under Section 473, even though the exact nature of the relief is not yet known.
Hopefully, clarifying assistance from the IRS or Treasury will be forthcoming soon.
WILLARD J. DE FILIPPS President, Willard J. De Filipps, CPA, PC, Mount Prospect, Ill.