Companies on LIFO should explore the IPIC LIFO method as a way to potentially increase their LIFO benefit for 2010. There are some key dates related to this type of method change. Once a company has completed their 2010 LIFO calculation, an IPIC LIFO estimate should be performed to determine the tax benefit of moving to the IPIC LIFO method. SourceCorp can prepare this estimate at no cost– the estimate phase typically takes 7 to 10 business days.

If a company does decide to make a method change and elect the IPIC LIFO method, the company has until the extended due date of the tax return to make the change. An IPIC LIFO implementation generally takes four weeks to complete. This means that if a 12/31/10 year-end company plans on filing a timely tax return on March 15, 2011, SourceCorp should begin the estimate phase by mid-January.

Should a LIFO taxpayer decide to evaluate the IPIC method after the return is filed on March 15, there is still time to make a method change for the 2010 year-end. Because a taxpayer has until the extended due date to make the method change, an amended tax return can be filed as late as 9/15/2011. This applies only to taxpayers already using a form of LIFO that included a LIFO adjustment when filing the annual financial statements for the 2010 year end.

To learn more about a no-cost analysis of the IPIC LIFO method, please contact me at Chandry.Jimenez@sourcecorptax.com.