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Posted by Pats Fan on September 3, 2008, 11:41 am
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I have a small Sub-S retailer for whom I did a (very) short-year
return in 06. For 07, we're properly extended, but 2 questions arise
after looking at the situation and doing some reading about it.
1. At the end of 06 it was our understanding that no inventory would
be involved. I set up as a cash-basis firm. I realized later that it
has plenty of inventory (though relatively very little at the end of
06). Do I have to file a 3115 (Change in Accounting Method) or would I
more properly file an Amendment for 06?
2. Capitalization of Costs (263A) They had substantially more
inventory in 07, but far less than $10mil in total sales. Am I reading
it correctly that under $10mil a year (assuming 3 years) they will not
have to capitalize costs yet? Reg. Section 1.263A-3(b)(1)(ii)
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