If your inventory costs are increasing, consider this

LIFO allows you to match your sales dollars with current year inventory costs.  This allows you to expense more dollars in the current year and capitalize your lower cost items into inventory.   

Considerations

Calculations under the LIFO method have become easier in recent years, so you shouldn’t be reluctant to consider it.  Be aware that the LIFO Conformity Rule states if you use LIFO for tax purposes, then you must also use it for your financial statement purposes.  (It may be necessary to consult with your bank and your finance department to see if it’s a viable alternative for your business.) 

Industry-specific Eexpertise

In addition to our broader financial and tax expertise, Plante & Moran has industry-specific expertise in LIFO analysis in order to do a thorough job of consulting.