Welcome to our LIFO Test page. We built this page for use by companies for whom inventory is a significant component of their operations (e.g., manufacturers, wholesalers, retailers). A tremendous number of companies use the FIFO (first-in, first-out) inventory costing method under the impression that the LIFO (last-in, first-out) method is too complex and burdensome. However, the IRS issued final regulations last year covering simplification of a particular LIFO method. Included in this change are automatic change provisions through the filing deadline of the 2002 tax year.
It is not uncommon for companies with a $10,000,000 FIFO inventory that have been using LIFO for 15 years or longer to materialize tax savings in excess of $1,000,000. Are you ready to deduct inflation as a tax expense? Then take the first step in exploring LIFO. The test below will allow you to evaluate whether the LIFO method of accounting for inventories may be a viable option for your organization. Please complete the following four easy questions to begin the analysis.