Form 970

Form 970

A form a company files with the IRS to declare that the company is using the last in, first out accounting method for its inventory.
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(8) Advance approval is generally not required to change to the LIFO method, but Form 970 should be filed along with the taxpayer's tax return for the year of the change.
If the taxpayer voluntarily makes this change by filing Form 970, Application to Use LIFO Inventory Method, there is no guarantee of eliminating exposure in prior years (i.e., audit protection may not apply).
A taxpayer wishing to adopt LIFO for tax purposes must file a formal application on Form 970 with a timely filed (including extensions of time to file) income tax return for the year of the election.
Dealers wishing to adopt the "alternative LIFO method" must file an election statement on Form 970. Proper completion of the form requires dealers to specifically (1) refer to Rev.
If a taxpayer is not presently using LIFO, it could adopt the new IPIC method by filing Form 970, Application to Use LIFO Inventory Method, with its return.
The LLC must file Form 970, Application to use LIFO Inventory Method, and otherwise comply with the requirements of Sec.
The corporation must also make sure to properly elect the LIFO method on Form 970.
Therefore, a taxpayer that has not elected to use the LIFO inventory method must file Form 970, Application to Use LIFO Inventory Method.
7 (1999), the Tax Court held that the taxpayer was not allowed to use replacement cost in valuing its LIFO inventory, because it (1) violated elections made by the taxpayer on Form 970, Application to use LIFO Inventory Method, and (2) is an improper method of valuing current-year inventory for dollar-value LIFO taxpayers.
The Tax Court was faced with two questions: (1) does the use of a replacement cost valuation method by a LIFO taxpayer clearly reflect income and (2) if it does, could Mountain State use such method when it filed Form 970, adopting the most recent purchases inventory valuation method?
*If LIFO inventory is transferred to an existing company, and the company is using the LIFO method for the same type of goods transferred, the existing company does not have to file a Form 970 if it desires to use the LIFO method.
* A taxpayer that wants to re-elect the LIFO inventory method during the five-year prohibition period may do so automatically by filing Form 970, Application to Use LIFO Inventory Method.