Uniform Capitalization Rules IRC §263A Overview (Currently Unavailable)

Author: Gary Markowitz

This on-demand course will address issues that tax return preparers and taxpayers' representatives may not understand when considering inventories for tax purposes. Examples will reference Schedule A of Form 1120.

Publication Date: May 2014

Designed For
Tax practitioners at all levels, regardless of tax practice, who want an overview of the Uniform Capitalization Rules (UNICAP) under IRC §263A. This course will help familiarize you and make you more comfortable when working on this important tax issue involving inventories for tax purposes.

Topics Covered

• UNICAP Overview
• IRC §263A
• Inventory Requirements
• Difference between §471 and §263A
• "Includible costs"
• Calculate ending inventory and cost of goods sold under §263A
• Direct & indirect costs
• Mixed service costs
• UNICAP regulations
• IRS' procedures when auditing the UNICAP issue
• Business issue for tax purposes

Learning Objectives

• Recognize the proper way to account for inventories for tax purposes
• Identify examples of inventory under §471
• Describe indirect costs that do not require capitalization under §471 that should be capitalized if treated as such for book purposes
• Describe the steps when considering the 4-step approach to §263A
• Calculate the ending inventory for tax purposes
• Recognize the net adjustment to taxable income in the current year
• Identify which taxpayers are subject to the UNICAP rules, before considering exceptions
• Describe the record keeping requirement for inventories under §1.471-2(e)
• Recognize the total cost for §471
• Identify the indirect cost required to be capitalized under Reg. 1.471-11(c)(2)(i)
• Describe what is defined as costs, other than interest, that were not capitalized under the taxpayers accounting method immediately prior to the effective date of §263A, but required to be capitalized under §263A
• Recognize which taxpyaer would not be considered a producer for purposes of §263A
• Identify the first year of a company subject to the UNICAP rules
• Calculate the §471 cost of a company in 2014
• Recognize the absorption ratio for a company
• Identify the taxable impact of the increase in the first year of accounting method

Level
Intermediate

Instructional Method
Self-Study

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
Experience/knowledge of inventory issues under IRC §471.

Advance Preparation
None